What is a Bullion Dealer?
A Bullion Dealer is a business that buys and sells gold and silver bullion. The term bullion refers to gold and silver, in the form of physical bars or ingots or coins that has to legally be of a purity of at least 99.5%. to be tax exempt.
Because bullion is considered to be a financial asset by central banks or governments, and large investment funds. They often hold bullion in the form of reserves.
Where Does Bullion Come From?
Gold bullion or Silver bullion is manufactured by a refinery, and the refinery can source gold or silver from many different sources. One source is direct from the mines. Once the mining company identifies the metal ore they extract it and sell it to refinery in the form of Dore which is subsequently refined into pure gold and silver bullion bars with a hallmark identifying who made it.
Another source of gold the refinery receives comes from unwanted gold jewellery. Gold dealers play a very important role here. They buy old gold jewellery and silver items from customers. Often the items that gold dealers buy are broken or unwanted jewellery. This doesn’t matter to the gold dealer as they are more interested in accumulating as much of the metal as they can. Once they have gathered enough scrap gold and silver they send the metal to a smelter to be refined and so recycle the metal back into the market.
What is a Bullion Market?
A bullion market means a retail investor can walk into a bullion dealer to buy or sell gold or silver bullion. The physical gold bars are sold with reference to the international spot price.
A bullion dealer will sell bullion slightly over spot price and buy bullion slightly under spot price. This is known as the spread. Spreads for physical bullion can range between 3% – 7% depending on the size of the bar. Although this may not sound like very much, totalling only a few dollars extra per 100 grams of gold, it does add up for bullion dealers who ultimately trade volume.
Can You Buy Bullion?
It’s actually very easy to buy bullion or to invest in it. The best way is to research your local bullion dealers, check their reputation, check what brand bullion bars they sell and if those brands are associated with the Bullion Market Association (LBMA), or if they are locally produced. Expect to pay a slight premium for LBMA accredited bars such as ABC or Perth Mint.
You should contact your local bullion dealer and speak to them to find out more about the process of buying or investing in bullion. The bullion dealer will assist you through the whole process and will be able to suggest the best type of bullion to buy to suit you own personal requirements.
When buying bullion you will be able to add a valuable asset to your financial portfolio by investing in a precious metal that will continue to remain popular as an investment asset.