Are you looking forward to educating yourself on how to become a profitable physical gold investor as well as how to identify reliable Gold Companies you can trade with? Below are the various strategies Gold companies use to get gold from customers. Remember, the more you know about gold investing, the more gold you can make with your money.
All Gold companies have something called a buy and sell spread. The spread is the price variation between the paid price for a gold item and what they are willing to list as their new selling price for that particular item. The spread depends on the product and the volume of the gold being traded. In most cases, the spread ranges from 0.5% to 35% in a given transaction. Gold investors are aware that Gold companies must also profit. Still, it is always crucial to know every detail of a company’s buy and sell spread since this can help an investor distinguish brokers from the rest salesmen who are only interested in making a quick profit.
Gold companies buy gold from the public and make money by selling the same gold to a wholesaler or the large-scale gold depositories. Typically, gold companies/ dealers are merely marketing companies which implies that they only facilitate the trade, but they do not hold inventories. When customers sell their metals to Gold companies, the company is more likely to sell the same metals at a profit to wholesalers. In simple terms, the wholesaler will profit by buying gold from Gold companies while the companies make a profit by buying the metal from you.
To attract more sellers, gold companies will offer a commission-free liquidation which means that the quoted price is final, i.e., it doesn’t include hidden fees and commissions that could take away part of your final sales profit.
Gold Broker Commissions
Gold brokerages, just like gold companies, have to make money to remain the business. Brokers receive commissions or bonuses depending on the sales volume they make. Generally, there is nothing wrong with transacting with commissioned brokers buy you must pay attention to how much they are pocketing per transaction. If you read the 2021 Goldco review, you’ll see some of these numbers explained further.
Top Sales Tactics to Watch Out for as a Consumer
- Using high-pressure sales. A gold company can train a broker to persuade a client until they accept the deal. It may involve making long phone conversations and using a persuasive tone.
- Affiliate marketing. A gold company can decide to strike a deal with a website that promotes gold deals. The site developer earns a commission for every successful gold client that transacts with the gold dealer through the Affiliate Marketing site. Although most of these affiliate sites claim to be impartial, you must be very keen. Some are not!
- Bait and Switch tactics. Here the gold company can advertise that they are selling gold at only 1% on the spot but end up tricking them into purchasing high-margin items to increase their bottom line.
- Overcharging. Some brokers will quote a gold item at a higher price than the actual price, so you must be very keen and compare the various quotes from other brokers.