Anyone with the proper knowledge and funds can invest in Gold in Nigeria. Gold for years has been one of those precious metals that rarely lose its value.
From the time when civilization is yet to creep into the world till now, it is one of those precious items that always remain valuable. Battles have been lost and won over gold, which shows how precious it is. In present Nigeria, the socialites will never cease to show up in various functions with their precious metals and the celebs for their fans.
Even people that could not afford the real gold will find counterfeits to live the moment. This shows how people value it which brings about an opportunity for investment in Gold in Nigeria.
Before you decide to go into it, it is pertinent to know how it works. This is not a business that anyone could just go into without proper knowledge. It is unlike the most lucrative business ideas you think to know.
Therefore, let us get into details.
REASONS WHY INVESTING IN GOLD IS THE RIGHT DECISION
Gold has shown itself to be dogged even during economic meltdown and volatility. Instead of experiencing devaluation, the value will rather remain the same or increase.
This is one of the reasons why businessmen and women do convert their currency into gold apart from the extravagant lifestyles it could portray for them. It is surely a great hedge against inflation anytime.
Been a precious item that is unlikely to decrease in value anytime soon, it is another way to tie down money until when you need it.
Money put in the bank may be affected by the market volatility and even stock you bought from top corporations may suffer the same based on the decrease in the company’s value. Whereas, putting your money into gold will give help keep your funds for years and could even appreciate.
3. Easy to convert to cash
Whether for investment or hold, gold is one of the items you can easily get buyers for in Nigeria. People often hold on to the idea that it never depreciates, so they will be willing to buy them.
Most Countries like China have also placed a great demand on gold and even in India, it is also one of the rare items that are often shared during a wedding ceremony. The bribe also receives gold as a gift from the groom’s family.
Nigerians are also not left behind, therefore you will always find people that want to take it off you when you want to sell.
To diversify is to not put all your eggs in one basket thereby reducing the chance of all falling at once. Meanwhile, we are specifically talking about gold here.
When you invest in this type of metal that is likely not to fall apart, this is you ensuring that you have something to fall back. The ornament is known to perform considerably well even amid an economic meltdown, unlike other assets.
Gold is therefore your best chance of defense and also a good alternative to make good money in any part of the world including Nigeria.
DIFFERENT WAYS TO INVEST IN GOLD IN NIGERIA
There are many ways to invest in gold in Nigeria but below are the most common ways:
1. Buying of physical gold for profit
The normal practice is to buy physical gold, hold on to it and sell for profit within a reasonable period.
This is also a means of diversification of portfolio. However, this could attract extra costs depending on the chunk. And the most challenging aspect is to find a haven for it which may also attract extra cost.
However, it is still a business that you would be happy to hold onto considering its imposing stance during any period.
2. Investment in Gold Funds
An investment option available with Gold is buying shares in companies that mine gold, holding physical gold bullion, or indulge in a gold future contract.
Investors normally invest in gold to protect themselves against inflation. This investment could emanate in the form of mutual funds or ETFs. When made available through mutual funds, investors will have to purchase through the bank while the exchange-traded funds (ETFs) can be bought from Stock Brokerage Firms.
By adopting this investment method, they will be avoiding the cost of storage and other expenses that might arise while holding onto the bullion.
Gold future contract is an agreement between two parties, whereby one accepts to receive or take delivery at an agreed date having made the first payment with the promise to pay the rest later. This kind of gold investment carries a big risk as there may be no actual studies of the market except speculation that may go wrong. If you are just getting started, a gold contract should be avoided until you understand the market.
HOW TO INVEST IN GOLD IN NIGERIA
1. Gain an insight into what revolves around Gold
The first step is to understand the basics, especially how to differentiate between fake and real gold. Not every yellowish metal is gold, some have been powdered to make it look like one. If you want to succeed, then you must know your craft instead of second-guessing.
To have the basic knowledge, find a mentor and ask for guidance. A mentor will help you faster, being in a real-life situation, you would be able to grasp all that is needed to know.
Another knowledge that might come in handy is to know the karats (Carat) of gold, be it in coin or any shape. A carat is used to specify the quality of gold and 24 karats of gold are said to be the purest form of gold. This information might be worth it when negotiating a price.
Most importantly, ensure to know the price of each form and weight. This piece of information may be the reason why you are getting a good deal.
2. The types of gold
If this has not come to mind, deciding the type of gold you want to invest in Nigeria should be one of those things you need to make a stand on.
You could be investing in broken pieces, or old jewelry which you can refine and sell at a very good price or you could invest in pure gold that is yet to be diluted.
If you will be selling gold in any form, which could be raw, in coins, used, scrapped, or refined ones, then you will need to be definite from the onset to make a proper budget for setting up a gold business.
3. Establish your sources
If you are bent on starting a gold business in Nigeria, then you will need to pinpoint where to buy the gold from. This is one of the major things you should know before setting up. It should be part of your brainstorming.
Your mentors should have a lot of connections, but in the event, information is withheld. If you are living in Northern Nigeria – Kano, and Kaduna are known to be places where you can get gold at a cheaper price. The reason why it is cheaper is that the demand for gold in Northern Nigeria is not as much as in Southern Nigeria. The south loves to be the centre of the party and nothing shines brightly than gold during a night party.
If you have a big budget, you should consider countries like China, India, UAE, and Ghana as they are best known for gold.
Most importantly, avoid buying gold at the roadside. Instead, visit companies, shops, or stores that have been recognized as Gold authorized dealers.
4. Understand your market
Another step towards achieving your dream of investing in the gold market is knowing who will buy your gold. Customers are the souls of a business and you must ensure you have the requisite knowledge about your potential customers.
Visit various gold shops or stores and think of what they are not doing which you should do or even better. During more than your competitors will be the key to securing a larger share of the market and you need to be resolute on that.
You can also improvise by partnering with them. The partnership could come in form of supplying gold to them in bulk or agreeing on a commission after delivering gold into their hands.
5. Find a suitable place to work from
As a gold dealer, you need a place to work from. This will make it easy for you and also give you validation. Anyone who will want to buy from you will want to do so at your place of business.
Avoid doing business with roadside dealers as they are more likely to pass fake gold as the real precious metal, but someone with an established shop or store would want to do right by the customers.
Therefore, when renting a space, let it be a suitable place in a decent environment that is not likely to cast doubts on anyone.
6. Acquire all necessary equipment
After securing a shop for your business in a secured environment, you must also add an extra layer of security by mounting burglary bars and alarms. This could help you keep the bad boys out, although it is rare to hear that gold shops are robbed in Nigeria and the major reason has to do with the owners running it from a secured location.
Other equipment or tools that you need to invest in are testing devices to differentiate if gold is fake or not, a display cabinet to display your gems, and a scale to determine the weight. The weight of gold will help you know the actual value.
7. Register your business
Business registration is crucial. Any serious business owner will ensure it has its business registered with the Corporate Affairs Commission (CAC), an establishment responsible for registering business names in Nigeria, thereby ensuring the right to do business in Nigeria. Upon successful registration, a CAC certificate will be given to the business owner as evidence of the existence of the business.
There are lots of advantages a registered and licensed business can enjoy, it could expand your customer base, access to a credit facility, grants, and more. Being a gold dealer, you should endeavour to carry out the necessary documentation with CAC for accreditation.
8. Advertise and promote your business
To be successful in this business, you must adopt a great marketing strategy. Knowing your audience is not enough, but how to convince them to buy from you especially when you are yet to gain credibility.
There are many ways to advertise your Gold business to the right audience, but the most effective and cheapest one is via social media platforms. Facebook ads have always been one and you can also create a large following through Facebook Business Account for free.
If you are willing to spend, you can unveil all the power of digital marketing and watch as your brands and sales improve. Still, ensure you leave it in the hands of experts who can help you get results.
9. Grow your Gold Investment
Now that you are set up, the next procedure to grow your gold investment is to find ways to make it happen.
You could adopt many strategies, but the best piece of advice is to be consistent with a proven market strategy. At first, sales may be slow but it always takes time for a new business to gain ground. However, when you combine intensity with consistency, it is just a matter of time you will not have to introduce yourself as a Gold Seller.
For new businesses, you can adopt gold flipping as well. Flipping of gold means buying broken, or outdated gold at a very cheap price and then sell for more after being refined.
HOW TO TEST IF A GOLD IS REAL OR FAKE
As a new dealer, endeavour to know how to test if gold is real or fake. If you are not sure, have a chat with an experienced dealer. Meanwhile, below are the ways you can find out if gold is fake or not:
You can test your gold if it is real by placing a magnet on it. If the magnet attracts the gold, then the gold is fake. At times, the gold may also have metal inside and then attracts the magnet. This test is only effective if you are buying raw or pure gold.
Another way to determine the authenticity of gold is to use a magnifying glass. A magnifying glass will help you to unveil wear or discolouration that may not be visible to the eyes. However, the result may not be solid enough as well as it may only show it is not gold in its purest form. If metal is not in the gold, then you can test only where the presumed gold is.
Carrying out a Porcelain Scratch test to validate a gold has been demonstrated many times to always work. This involves using a ceramic plate or unglazed tile to scratch the metal said to be real gold. If it is, it should still leave the streak in gold. If the spot is black, it is fake.
If after all these, and you are having doubts. Do not rule out the doubts, you should let the professionals handle them. Using nitric acid, and hydrochloric, they will be able to determine the authenticity.
IS GOLD INVESTMENT GOOD OR BAD IN NIGERIA?
Considering all the various points we have been able to identify in this article, it is safe to admit that an investment in gold rarely goes wrong.
Gold dealers in Nigeria have been able to amass wealth by investing in gold. However, gold at times may be whipped by market volatility, but will always maintain its value for long.
If you are still on the fence and still undecided if it is good or bad, understand that an investment made on gold mostly has a favorable outcome.
However, set up your location where the demands are high. Lagos, Abuja, Kano, and Kaduna are places that are likely to have a good number of potentials customers.
SHOULD I INVEST IN GOLD OR STOCK DURING AN ECONOMIC COLLAPSE?
Experts have observed that Gold could withstand almost any meltdown in the economy. It is one of those investments that retain its value during such time, being a safer investment.
Stock investment could experience some great challenges but has always performed better than gold. Still, when hit by a recession, it could be disastrous.
When investing towards achieving big profits, stock is the instrument you should key into, but when looking for a profitable business with a low level of risk, Gold rarely loses in this area and could help you diversify.
WHAT IS THE MINIMUM CAPITAL TO START A GOLD BUSINESS IN NIGERIA?
To be honest, this is not a low-cost business as it involves getting lots of things in place. If you are starting a gold business in Nigeria, you should have at least One million naira.
The capital will enable you to get a fine and secure location for the business, furnish the space, install gadgets such as CCTV, get equipment, promote your business, and others.
However, you can also start on a low key with just N200,000 but may not be up to the standard expected of a Gold Shop.