Why the buying price sits below the market price
Every price page carries two figures: the market price of the moment and what we pay. For most kinds of gold the second is lower; only gold coins we buy at the market price itself. Here is why, and how much lower it is for which kind of gold.
What the market price is, and is not
The price you see everywhere – on the exchange, in the news, at the top of this site – is the price at which large lots of pure metal change hands between traders. A thousand ounces at a time, in a recognised vault, with a certified fineness.
Your chain is not that. It has to be weighed, tested, collected, transported, melted and refined before anything exists that can be traded at that price. That work costs money, and the difference is the margin.
With jewellery and old gold there is therefore always a difference; the only question is whether the buyer names it. Gold coins are different: we buy them at the spot price, with no margin.
Where the difference goes
Four items, and they are nearly as high for ten grams as for a kilo. That is exactly why a larger lot earns a better price per gram: the fixed costs weigh far less heavily.
- Establishing what it is. Weighing, reading the hallmark and measuring the fineness with our handheld X-ray analyser, with an acid test where needed.
- Refining. A small part is lost in melting, and the refinery charges per lot – even when that lot is not full.
- Transport and insurance. Precious metal does not travel by ordinary post.
- Price risk. Time passes between the moment we pay you and the moment the lot is sold. In that time the price can fall.
You can always check it yourself. Every product page shows the price per gram and the amount we pay. Divide the second by the first and you have the percentage we hold back. We show those two figures side by side deliberately.
What we hold back per kind of gold
Not all gold costs the same work. Gold coins – bullion coins such as the Krugerrand, Maple Leaf and Philharmonic, but also Dutch, Belgian and historical coins such as the ten-guilder piece and the twenty-franc coin – we buy at the spot price, with no margin. Fixed weight, fixed fineness, and we know what we have in hand.
A gold bar from a recognised producer carries its fineness, weight and serial number on itself and never needs the smelter. There it is the spot price minus 2 per cent.
If a coin is worth more as a collector’s piece than as material, we tell you so – you receive the material value in any case.
Jewellery, old gold and dental gold stand at the other end. Unknown fineness until it is measured, stones and springs that have to come out, and the melt is unavoidable. There it is the spot price minus 9 per cent, a little less for larger lots.
What you may expect from a fair offer
Three things, and all three can be checked before you hand anything over.
The weight on calibrated scales, while you watch. The fineness, with the measurement shown – not “this is 14 carat” but a hallmark you can see yourself or a measurement you are standing next to. And the sum spoken out loud: so many grams, times that fineness, times the price per gram of fine metal.
If what comes out is a figure you cannot retell, there is no calculation but an outcome. Ask further, or go somewhere else. A valuation costs nothing and commits you to nothing.
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Questions about why the buying price sits below the market price
How far below the market price is the buying price?
That depends on what you are selling. Gold coins – from the Krugerrand and Maple Leaf to the Dutch ten-guilder piece and the twenty-franc piece – we buy at the spot price with no margin, and a gold bar from a recognised producer at the spot price minus 2 per cent. For gold jewellery, old gold and dental gold it is the spot price minus 9 per cent, a little less for larger lots, because weighing, measuring, melting and refining all come into it. Every product page shows the price per gram and the amount we pay side by side. Divide the second by the first and you can see for yourself what percentage we hold back.
Why do I get more for a larger lot?
Because the costs of testing, transport and refining are largely fixed, and on a kilo they weigh far less per gram than on ten grams. Measuring the fineness, insured transport and the refinery, which charges per lot – even when that lot is not full – cost almost as much for a small lot as for a large one. That is why the margin on gold jewellery and old gold is the spot price minus 9 per cent, and a little lower for larger lots. We give that back in the price per gram, not as a favour but as arithmetic.
Why does one buyer pay more than another?
Usually a different margin, and sometimes costs that are deducted and only come up afterwards: melting fees, valuation fees or an administration charge. A high price per gram therefore says little as long as you do not know what comes off it. Always ask for the amount you will actually receive, and have the sum spoken out loud: so many grams, times the measured fineness, times the price per gram of fine metal. Check, too, that the weighing is done on calibrated scales while you watch. With us the valuation is free and without obligation, and you only sign once you know the amount.
Can the price change between my valuation and the payment?
In theory yes, because the market moves all day. In practice we settle at the price at the moment of the transaction, and that price is on the purchase receipt you always take home, together with the weight, the fineness and the amount paid out. The amount you hear at the table is the amount you sign for, and you only sign once you know it. If you want to fix an online calculation before you come, that is possible up to € 2,500 for 48 hours: the price guarantee. Without that guarantee, the price at the moment of your appointment applies.
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Ask it here. You will receive a personal reply by email, usually within one working day – no automated message and no phone call you did not ask for.
- An answer from a valuer, not from a template
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Sources
Where you can verify what you have just read.
- LBMAThe London gold and silver price our daily rate is built on
- WaarborgHollandThe Dutch assay office that verifies fineness and strikes hallmarks
Rather just have it looked at?
A valuation is free and without obligation, at a location near you.