Precious metals such as gold and silver are in demand all over the world. Though they have their industrial uses, normal people usually buy them nowadays as a way to invest and protect their wealth. With that in mind, becoming a precious metals dealer sounds like a profitable venture. But like all businesses, there is a chance for failure.
Here are some useful tips that should help you avoid it:
Be Familiar With How You Can Make Money
The biggest challenge that any potential precious metal dealer can face is how to make money. Most people assume that it is similar to buying low and selling high. This is pretty much against their goal. Whether it is gold or silver, precious metal dealers try to avoid speculating on prices since they can be volatile. What most of them do is to act more like a broker for a wholesaler, while some hold only a small inventory to do some hedging.
The real source of profits for precious metal dealers is the premium amount. Instead of the spot price of the precious metal, most dealers sell a bit higher since they usually sell bullions or coins that have processing costs. The result is that they can justify selling higher than the spot price and this has a chance to profit.
Know Where to Buy
One of the first things you need to learn is where to buy your precious metals. You can buy direct from the source of most of the world’s precious metals, the refineries. If you plan to sell in Dubai, for example, you need to look for a trusted silver and gold refinery. The best sign that you can trust them is if they have independent certification from a trade body. This usually means they passed the standards for dealing with precious metals. You can then be sure about buying from them wholesale.
Besides the big refineries, you can also buy precious metals from the public. There are many people out there who need cash who will be willing to sell jewelry and more to you. You need to learn how to properly value these offerings though.
Have the Right Kit
There are essential items when dealing with precious metals. First, there are testing kits. This is to ensure that you are not getting any forgeries. Additionally, they can check on the quality of the piece. You should also have a jewelry scale to properly measure the weight of what you are selling and buying. Finally, you need a magnet, metal file, and loupe for properly evaluating jewelry.
Try To Be Fair
It is tempting to prey on people lacking knowledge but that is bad business. If you want repeat business, then you need to establish a reputation for fair dealing. Always give honest advice and present good prices. This ensures that people will come back. You might lose out on a good deal or two but you sleep better at night and have a great reputation.
Dealing with precious metals can be a big business. You will be dealing with some of the most valuable commodities in the world. Their prices can skyrocket at times and they can keep their value. But this is also what makes it challenging. Always remember to be careful in your dealings, so you can succeed in this business venture.