Those who receive gold in the form of bars and coins at prices well below the usual delivery rates, should be alarmed. We’ll explain why there are no cheap deals on the gold market for classic investment products.
Would you sell a 20 USD for 19 USD? Probably not. And that is exactly the reason why one does not get investment gold (gold bars, gold coins) at bargain prices. Gold is not just a commodity, gold is money, currency reserve and a piece of financial security and independence in a society dominated by unlimited credit money and the permanent growth primacy.
What does that mean in concrete terms? In precious metal trading you will not get an ounce of Krugerrand at prices below a 3 percent markup on the current gold price. For the most popular gold ingot weight of 100 grams, this premium will never be less than 1%. Because the margins in the gold market very low, unlike other asset classes such as financial products, real estate or savings contracts. Increasing competition and perfect price transparency through the Internet are driving this development. And even in wholesale you will receive even for larger purchase quantities no significant discounts.
However, it is true and important that the price per unit (e.g., per gram) falls with increasing weight of the investment product. In other words, you pay more for two 50-gram gold bars than for a 100-gram gold bar. Because the comparably high processing and deployment costs for both products (sales, marketing, storage, insurance, etc.) are reflected in the price of small sales units in percentage terms.
In addition, gold is in demand, gold is of consistent quality and can therefore be bought and sold at any time close to the current gold price. Even for damaged fine gold coins you still get a so-called melt price. Because the gold can simply be transposed, it does not even have to be refined. Gold is a much traded product. There is no need to sell goods below cost.
What is the consequence? Always be suspicious if you are offered the classic gold investment products well below the usual selling prices. In this case, in 99% of the cases something is lazy. Either the provider does not mean it seriously, so it is a fictitious Internet retailer or the gold is not genuine.