Basic Principles of Gold Buybacks
Gold merchants or rather precious metal dealers in Australia are a dime a dozen, especially in Metropolitans such as Brisbane. It is due to this reason that it is important to observe that some merchants are definitely better than others. If you are wondering why, it is because some merchants actually offer more attractive rates. One such company is the Brisbane Gold Company.
They not only offer high prices for goods that contain precious metals such as palladium, silver, platinum and gold, the also offer some of the highest buy back rates in Australia.
If you are not too sure about what buy backs are with regards to the precious metals industry, here it is. When an individual buys gold from a particular company for let’s say 1000 dollars an ounce on Monday which is what the market price is on that day and decides to sell that ounce of gold to the same merchant, they buy it for 2 or 3 % lesser than the market price, which is the margin that they make, without which, they will not be able to make a profit and sustain their business.
Now that is a scenario whereby the client buys and sells the gold to the same company ant the same market rate. Now let us say that the client decides to sell the gold to another company, the buyback price would be even lesser maybe 4 % lesser than the market rate.
Now let us say that the gold buyer decides to keep the gold with the intention of selling the gold when gold prices go up, and let us say that the price does go up the next day, he would have a tough time selling his gold ounce to other companies at the new market price in order to make the desired profit. He would be forced to go back to the original company where he purchased it from, and usually when prices of gold spike significantly the margins are increased to reduce the ‘loss gap’.
For instance the price of gold shoots up to 1300 dollars an ounce the very next day, the company would ‘buy it back’ at a 4 or 5 % lesser than the market price. Even at 5 % the price is still 1,235 dollars which means the gold merchant will still be losing 235 dollars from this sale. However whether the company is making a profit or loss from a general perspective still would depend on how much gold they have purchased and how much gold they have sold.
If the company had sold more gold than they had purchased, it is likely that5 the company will run a loss as people come in to exchange their gold for cash. Thus, it is critical to know the ‘guaranteed’ buyback rates of merchants from whom gold buyers purchase their precious metals from.
Some companies offer more than others, while others practice a price hike ‘rating system’, some do not offer this service at all, meaning if at all the price of gold does go up, they would just simply refuse to buy the very gold that you had purchased from them when prices were lower.
For more information click here http://www.brisbanegoldcompany.com.au/.