Companies that deal with precious metals are actually quite common. The trade involves every aspect of the precious metal industry. How these companies make revenue in their offers of cash for gold is based on the buys.
When selling gold jewellery, one has to understand that you are not just selling gold alone, jewellery is normally a combination of gold and other metals. The value of that piece will only be given for gold and not the other elements that come along with it. These companies that are in affiliation with refiners on a ‘first hand’ basis normally pass the cost of extraction to the person selling gold. An example of how this works is:
If a gold seller had an 18 karat gold piece or jewelry and takes it to a gold dealer with the intention of selling the gold jewelry, he would be offered the price of the gold according to the spot gold price minus the cost of extracting the gold.
After he is paid for the value of the gold minus the extraction cost, the gold is actually never extracted, instead it is refurbished, and made new before it is sent out into circulation again still in its original 18 karat state.
If the cost of buying the jewelry (which includes workmanship) was for example a thousand dollars, the gold seller would be only paid eight hundred dollars which would be the actual value of the gold content plus the extraction fee of the content. After this stage the gold is made anew and sold again into the market for maybe slightly more than a thousand dollars (a ten percent mark-up is common). The company makes close to thirty percent in profit.
More reputable companies, such as an Australian company known as Brisbane gold buyers, are able to offer better deals to most potential customers due to the fact that they are also retail and wholesale precious metal dealers. They are gold refiners themselves and normally refine gold in bulk batches.
This saves cost on their part and increases profit. The mechanics behind this fact allow the reputable gold dealers to offer higher value to their customers than most other gold traders. The precious metal industry is saturated with dealers and traders for are at the bottom of the trade that charge end users excessively.
As such dealing with dealers that are on top of the industry’s pyramid is a much better option as sellers are able to receive more value for their precious metals.
