Best Offshore Gold Storage Service Providers
A standard misconception among Gold Dealers is the fact that gold retailers make money when the price of gold increases, and later lose money when the price of gold decreases. Broadly speaking, nothing might be further from the facts. Gold dealers are highly risk averse given the unpredictability of the metals market, and thus they are quite unlikely to speculate on future spot price*.So do gold dealers shield themselves against price changes?
Hybrid vehicle operations operate, carrying some products, and fall shipping others. For the dealers holding inventory, nearly all "hedge" their stock in the markets. As an example, if $50 increases, the dealer can make an additional $50 to the sale to the customer, while in the same time losing $50 on his short place.In this way, they essentially pass along hedging obligation to the wholesaler, while making money.
Either way, the system is not fool proof. Considering that the vast majority of dealers "lock-in" the customer to a cost before the consumer pays, dealers who've unhedged their place, and agents who've locked in with wholesalers, are exposed to price fluctuations in case the client determines to not pay. Unfortunately, many investors think purchasing bullion is not any different than purchasing a book online; that the vendor is in no way affected for an order cancellation. On the contrary, a non-paying customer presents a serious issue for dealers. *Review: Spot price is the over the counter commodities exchange cost to get a 400 ounces good delivery gold bar. It's the price quoted on stations that are new as the gold price.Just how do gold dealers make money?
Dealers make their money on the "premium," the amount charged within the spot price. Above the spot price of gold, you could pay a premium of $60 for a US Mint Gold Eagle. But before you presume that a gold dealer makes $60 per coin, you should also consider that dealers don't purchase these coins in the spot price.