Where do Bullion Dealers get their Gold?

When you decide today to buy gold bullion you’ll go to a bullion dealer. You can expect to pay 2 to 20 percent above the spot price. This means that the gold buyer makes a profit of 2-20% of whatever the spot price is. 

If this is what you’ll pay to acquire the bullion how much does the dealer pay to acquire the bullion in the first place? 

Bullion sold by gold dealers comes from three sources: 


Refineries are the main source of bullion. Reputable refineries subscribe to the regulations set by the London Bullion Market Association (LBMA) which sets the standards. The association has a list of refineries that have established processes and quality standards that meet the LBMA’s standards. When you buy bullion whose brands are on this list then you are guaranteed a high level of purity. You can sell these products anywhere in the world

Recycled Gold

Refineries aren’t the only sources of bullion. A bullion dealer can get gold from the second-hand market. These are sold at the spot price. Gold from the second-hand market includes coins bars and jewellery. Some of this gold is sold to refineries where it is melted and purified to make new gold products. Some of the gold is good enough to be resold as is.  In general, bullion dealers will pay 2-10% below spot to acquire used gold. 

Discounted Gold

 Discounted gold sold in bulk sometimes comes into the market. This is usually gold sold from third-world countries. A lot of people have come across offers that turn out to be scams. With that being said, there are legitimate gold sellers in countries like Africa. You can buy your gold directly from mines. However, this gold will not be as pure as refined gold. Gold from mines is known as doré. This is rough gold made up of 80% gold and a variety of other metals. There are risks to buying unrefined gold from mines. To avoid these most bullion dealers will go directly to gold refineries. 

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As a matter of fact, reputable bullion dealers will single out mines that subscribe to the LBMA standards. At least, that way they know they are operating within the globally acceptable quality standards. 

Bottom line

Gold has become very popular over the last couple of years. People have woken up to the fact that when everything around them is collapsing, there is one thing that will stand firm and maybe even make gains and that is gold. Of the three options for sourcing gold, two are really viable and acceptable when buying gold bullion, the buyer needs to weigh the risks and the opportunities of owning gold bullion. The important thing to keep in mind is that there are more ways to participate in the gold market than ever before. You don’t have to be a millionaire to buy some gold to secure your future. It is only important for you to know the kind of gold you have and what it is worth.


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