Since at least the beginning of the year in 2020 gold buyers have been extremely active in New Zealand as well as the rest of the world with everyone from commercial buyers to private individuals moving at hyper speed to buy and sell. As it has historically, the latest run-up to a new value height has brought everyone out of the woodwork and not just folks wanting to jump in to buy as new investors.
High-value points on gold also bring out sellers who realize the increasing demand pressure presents a great time for current holders to release their gold holdings to receive the higher gain from their earlier buys. So, dealers and commercial buyers are just as busy on the receiving end as they are on the selling end of things, managing gold activity on two fronts at the same time.
In terms of comparisons, 2020 continues to be unique and unknown territory in terms of buyer behavior. The runups experienced has been an ongoing climb since 2016, and each dip has had folks wondering if that was the crest only to see gold’s value move even higher and stabilize. Many jewellery institutions and dealerships have seen their bookings increase on average well over 10 percent if not higher, and the pace seems to be increasing.
An interesting behavior trend is the fact that when momentary dips occur in the current rise, people tend to sell more scrap and more seems to get taken in to address demand. That in turn pushes demand even higher again and again. It seems counterintuitive, more supply should lower market prices. However, with all the price watching going on, each dip seems to send off alarm bells to scrap gold holders to unload, which in turn produces more gold on a very tight market to fill backorders. Folks sense a chance to buy in, and the price goes higher again.
Current instability has also been keeping gold buyers busy looking for new supply sources. Whether it’s the election time in the U.S., the resurgence of COVID in Europe, or the movements of China in Asia, all these issues drive heavy investors to seek gold as a safe haven from the instability of their other market options. That pushes dealers to seek out additional scrap supply to meet institutional demand. And they can’t keep up, which drives prices higher as well.
Why do commercial gold buyers matter so much? Doesn’t most gold come from mining? The truth is scrap gold taken in by commercial gold buyer make up 30 percent of the new supply that becomes available each year to the market. New gold from mining was flat in 2019 without any increase or change in production, which scrap gold increased in supply by about 2.5 percent. And that was before the 2020 COVID pandemic effect kicked in.
From the buyers’ perspective, everybody seemed to be cleaning out their personal lockboxes and safes and evaluating whether to liquidate the gold coins they had been given or inherited from five or ten years before to take advantage of the current high market prices. The same went for solid gold jewellery. The one exception to this behavior was in China. In a region that traditionally played a big role in gold consumption, China’s buying dropped dramatically as both social distancing as well as restricting pending to essentials was widespread, dramatically dropping demand in that part of the world market.
To run a viable commercial operation buying and selling gold, a gold buyer has to make the math work in his or her favor by selling a higher price point than what the gold was bought for. That said, no one will sell gold extremely far below market price as the competition will pay more. So, buyers have to maintain a balance between what is an appropriate but fair portion of the market price point offered to individual sellers versus what the buyer needs to maintain operations and make a profit as a business. Once taken in, the gold is melted down, purified, and recirculated as gold bars for either investors or commercial users to turn into new coins, products, or industrial applications.
All types of gold are eligible to bring to a gold buyer for scrap gold. That can include anything from jewellery to fixings to watches to accessory placements. However, the key factor is that the item needs to be solid gold. Gold-plated items obviously would not be accepted, and items with mixed material placements in them will not be accepted either (it’s too much work to fuss trying to separate the gold from the other elements involved).
The point for the buyer is to take in as much scrap gold at a reasonable price as possible so that it can be bulked, sorted, melted, and recirculated for revenue. The sorting is generally based on the quality of the gold, with 24 karat gold being worth far more due to greater purity than 10 or 12 karat gold. Note that the quality of the gold doesn’t necessarily dictate demand, just the price paid for it. There are many applications for lower karat gold. For example, men’s rings tend to be made from lower karat values because they retain greater strength and don’t bend as easily with daily use.
Technically speaking, just about anyone can be, in practice, a gold buyer. One just has to have sufficient cash flow to afford the purchasing involved. After that, much of the issue is the bargaining between the buyer and seller as to what will be bought and how much. However, gold buyer Auckland experts tend to be commercial operations who have invested both in the training, equipment, and operations to function as a bona fide business in New Zealand.
Even still, there is a range of buyers within this category as well. The commercial buyer environment for gold can include any business from a pawn shop to a general second-hand good to a jewellery shop to a special gold dealer to a gold refiner. For the most part, individuals selling scrap gold or second-hand jewellery tend to deal with everyone but refiners. While refiners will buy from private individuals, they are looking for large lots of gold, not single pieces per se. These they can source from the other players in the commercial buying spectrum far more efficiently.
To understand the nature of differences between buyer types, the following is provided:
- Refiners – These are the players who take lots of bulk gold and do most of the melting and conversion of the material to bars. While there are two types of bars available to investors, minted and cast, refiners are oftentimes the producers of second-hand gold in cast bars. The melted material is purified and poured into casts of various sizes, and the gold is then resold to commercial buyers and bulk investors who are looking for large supplies in single purchases. As noted earlier, refiners don’t generally deal with private individuals much; their bread and butter come from other commercial players who aggregate scrap gold into larger lots that refiners can easily work with.
- Specialized Gold Buyers – Specialized New Zealand gold buyers are businesses that are dedicated to the precious metal market. They frequently take more than gold, but the yellow metal tends to be the biggest part of their business in terms of revenue. Silver, palladium, and other precious metals are often taken as well. Again, the criteria for these players is that the items bought are solid precious metal and not mixed or plated, which is just a thin surface bonded to a common metal. Specialized gold buyers typically offer multiple services, both in terms of buying and selling gold bullion products, as well as providing storage services as well and storage products like safes. Some dealers, depending on the size of their operations, may even engage in melting as a refiner as well, combining both types of market players in one business. The big difference, however, is that specialized gold buyers specifically deal with individuals as their primary customers along with other businesses. So, these are some of the most professionally gold buyers to work with if you have scrap gold to sell.
- Jewellery Dealers – Due to the fact that jewellery dealers by their very business nature handle new and resold jewellery and fine items, they will regularly handle gold jewellery as well as some level of bullion, most often in the form of coins. Their primary focus is on the jewellery side, but dealers have regularly been involved in taking in scrap gold as well and paying private individuals for the same. It’s rare for a jewellery dealer to also be smelter, but on occasion, some dealerships also manage and melt scrap gold for bulk supply or to resell to jewellery makers. These businesses, when they do buy scrap gold, are very well-informed and price accordingly with enough of a difference to make it profitable for their operations, but gold-buying is not their primary business focus.
- Pawn Shops – Being in the business of making a profit by lending people quick sums of cash, pawn shops take in all sorts of goods that have obvious and marketable value to them. The primary goal of a pawn shop is to make a significant profit on the loan provided. The personal loan made is often secured by the valuable item brought in as consignment. Pawnshops regularly have both fine jewellery as well as bullion items in the form of coins. They rarely have bullion bars. Where a borrower does not pay the loan back or outright sells the items to the pawnshop for cash, the pawnshop then turns around and tries to sell the items to new private buyers for a higher price point. Gold bullion coins and jewellery move well, but they are priced extremely high in a pawn shop versus what one could buy them for through other channels. Because their intake market is so varied, buyers generally don’t have expertise in gold, but they do know how to test for it and how to drive the price down to make a big profit on the purchase. As a result, pawnshops generally don’t make a good buying avenue for a private seller looking to make a reasonable sale on scrap gold.
- General Second-Hand Buyers – This category includes all sorts of outfits ranging from “hotel” buyers to payday cash loan shops. Many of these are side operations where the business has realized there is a potential to make money buying gold from private persons and reselling it in bulk. These shops frequently don’t try to resell items individually like a pawn shop does. However, similar to a pawn shop, gold is not their primary focus. So, to make sure they don’t overprice an item, general buyers oftentimes mark well below market price to ensure a good profit. Again, this is not a very good channel for a private seller, but these characters often make business from folks who need cash right away. Hotel buyers operate the same way with the same profit focus, but they generally show up in town, advertise their buying at a hotel or temporary location with cash in hand, and then they disappear a day later after purchases have been made. What is paid is frequently well below market price.
Your best gold buyer Auckland resource, by and large, will almost always be a specialized gold buyer like Gold Smart. Our services include expert buying teams and specialists who can easily help you understand the scrap gold sales process and have no issue working with you in-person or online for the same. Because Gold Smart has been a long-established gold buying business for years, we have a strong reputation and service reference in fair treatment of all our customers large and small.
And we offer the benefit of combined services, including buying and selling gold bullion, storage services, and sourcing as well. As noted above, there are multiple channels and buyers in New Zealand, but when you really think about it, one of the safest and best paths for gold-selling is a very simple answer in the crowd: Gold Smart.