What Makes Quality Bullion Merchants Stick out
Let us go into the guts. Gold shops do not all have an equal place to go to; there can be shops running completely clean which there are shops which cut corners or even there can be outright scammers like gold bullion dealers. That is how the good and the bad are separated here.
Accreditation and Licensing
Start here. Good bullion dealer ought to be licensed and registered with trade bodies. Seek membership in such groups as the Professional Numismatists Guild (PNG) or the American Numismatic Association (ANA). Trade association is rather similar to referee whistle in sports—they make it fair. Always make sure you read customer reviews and even official complaints on websites like the Better Business Bureau (BBB). See the light of day about their performance prior to committing.
Transparency
Have you ever had to deal with someone who answers your questions half ways or avoids the question altogether? It is repugnant. When they first come to reliable dealers they should be keen as to their pricing in the order of premium, shipping and any possible buyback policy. When a dealer does not want to offer information or becomes cagey, then that is a red flag. There is a lack of secrecy, which represents sincerity.
Product Variety
Variety is not always the spice of life, but it has a lot of upsides in precious metals. The carefully defined dealers deal with the variety of gold bars, coins and rounds issued by the famous gold refineries and mints. Think U.S. Mint, Royal Canadian Mint, Perth Mint and the PAMP Suisse among others. In the event that everything a dealer sells is off branded or without certificate or assay card, then think twice.
Customer Service
When you have people you can trust on the other end of the counter, any experienced investor will tell you, it makes a big difference. Good service is more than saying hello and goodbye in a friendly way. You desire knowledgeable personnel that can respond to your questions, explain what you can do and how the purchase (and, yes, sale) process should proceed. When the individual you are dealing with at the other end is evasive, high pressure or simply rude, go with your business somewhere else. Go by your instincts.
Dealer Markups: The Price Tag that is Not Discussed
Have you ever filled in your internet price and down at the coin shop or online dealer it is always cheaper? The reasons are as follows: dealer markups, also termed as premiums. So, let us analyze the figures.
What are Dealership Prices?
Building up the markup, think of it like paying the dealer to provide the service of his or her time, skills, handling and risk. These differ depending on:
The type of product: Coins tend to be sold with a higher markup as compared to bars. Such wares as American Gold Eagles or Canadian Maple Leaves, say, may be premium priced (cost) 5-10% above spot. Gold bars that are more easily manufactured have charge up costs of 2-5 percent.
Quantity: Sometimes when you buy in bulk you can get a better price. The larger the amount you purchase the lower the price paid per ounce is most of the time.
Demand and rarity: There are products that will be always more expensive. e.g. Mintage coins or coins with strong collector interest.
Dealer overhead: The overheads of large and established dealers may sometimes make it possible to charge smaller premiums based on volume and efficiency whereas the smaller shops will be required to support the overheads through higher mark ups.
It is an engaging title called Let loose the Math that can be used as the book title.
Assume that today the price of gold, in terms of its so-called spot price, is one thousand dollars an ounce. When a dealer sells a normal 1 oz coin to you at price of 2,100, then he is marking up at 100 dollars, or at 5 percent. A retail investor can also anticipate paying between 3-8 percent on average on conventional products, although true price can run much higher at times of the year when there is increased demand.
Hidden Expenses to Look Out For
There are additional charges added by some dealers on so-called handling, expedited Post Office service or insurance. Put in asking an out-the-door price before you say yes. Otherwise, this so-called good deal can grow very quickly.
What Suppliers Can Charge You from Markups
Just imagine markups to be shaving off your pie before you even eat it. The more the mark up, the longer the time it will take before your investment pays back—because the market value of gold not only has to go above spot, it also has to surpass what you paid plus the premium.
When you want to sell fast, you will not get the premium you bought, only the spot price (at that day and time). You are downside, or as it is known, you are the dealer profit margin. This may be of slight inconvenience to the long-term holders, but to short-term flippers or people with less capital the math is critical.
Spot Prices and The Pricing of the Physical Product
You will see quoted spot price everywhere, that is the price of raw gold in 400 ounces bars between banks and large institutions. The cost you bear in buying a coin or small ion of gold is manufacturing, transportation, marketing, dealer and risk costs.
It takes hundreds of ounces on institutional trading desks before you will ever buy gold at spot. Dishonest dealers will not tell you this in advance. Be careful of the slick marketing that is the main focus of this post.
The Best Way to Get the Deal
Shop around, here is a small secret. Compare no less than three dealers. When one is offering suspiciously low prices, take precaution. In some cases, it is too good to be true. Use well-known suppliers who you can see achieved some records.
There may be volume discounts and bundles—in some cases, dealers will give you a slight discount as long as you buy a few coins/bars in one order. Never fear to negotiate, particularly with local shops. There is a margin of wiggle room allotted especially in larger purchases.
