Entrepreneur

How A M’sian Company Is Innovating A 1000-Year-Old Industry Worth $7.7 Trillion

  • In 2018, Nubex launched an online trading platform for precious metal products.
  • This platform is also part of Nubex’s efforts to address two major issues in the industry: liquidity and mobility.

In an age when the price of Bitcoin can fluctuate to the point where you’re a millionaire one month and broke the next, some have stuck to their guns to more traditional methods of investing.

One market that has been stable for millennia is gold, with an estimated US$7.7 trillion market value.

An interesting observation about the gold and precious metals market is that customers will very likely become suppliers in the same market. This is because most of the products sold in the market are not consumed, but rather kept as savings or as insurance against economic and financial uncertainty.

Realising this, in January this year, Nubex launched an exchange platform for precious metal products, allowing sellers to meet buyers for a price discovery, and to help facilitate direct transactions between them.

Nubex was founded 10 years ago; after the 2008 economic crisis, the founders were fascinated with the idea of precious metals as a form of alternative currencies. They also realised that e-commerce platforms are rare in the precious metals market.

As an online trading platform that carries both its own products and output from other minters at competitive prices, Nubex Exchange is part of the team’s effort to innovate and modernise the gold industry.

Why Would Anyone Buy Or Sell Gold Online?

When it comes to buying or selling high value items online, one big challenge is trust.

“Precious metals are valuable items, which people are quite sceptical about selling such items online. Most of questions that we get are ‘How to make sure the items that we bought are not fake and secured?’ People are concerned about the security of their items, as we now exposed to online scams,” the team shared.

One key differentiating point that Nubex Exchange has is that the items are required to be physically delivered to their centers before sellers can sell them on the exchange.

This is so that Nubex can verify and authenticate the items, to protect buyers from forgeries or fakes.

That is on top of the online verification that sellers have to go through before being able to list products on the platform.

As a quick breakdown, the exchange platform handles:

1) Electronic Trading Platforms
2) Fulfilment centres (storage)
3) Authentication
4) Payment processing
5) Delivery

Buyers get access to Nubex’s customer base, with more than 13,000 registered customers to date. A major highlight on the buyer’s side is the aggregation of supply from the secondary market. Put in simpler terms, this gives buyers the opportunity to discover lower prices from a variety of sellers.

The abundance of sellers will also increase the variety of products, and, coupled with Nubex’s track record and expertise, the team is confident that the exchange will gain high traction.

For sellers, the exchange allows them  to get higher gains as they can set their own preferred price. Usually, precious metals are sold to bullion stores or goldsmiths that offer far lower than the spot price.

According to the team, customers’ sell back rates made up almost 50% of Nubex’s total purchases in the past. They believe this helps to lure sellers to the platform, as it allows them to sell at a higher price.

Dealing With Other Issues In The Industry

Two key issues that slow down the purchase and movement of gold are liquidity and mobility. Nubex is already looking to address both on their exchange.

Nubex Exchange has a swapping component. This allows any buyers with a product to exchange it with a product of the same value on the platform, even if the seller is in another country. The product has to be similar in terms of weight and purity, and must have been handed over to Nubex for authentication and safekeeping. This eliminates the need for expensive shipping and insurance charges for cross-border transactions, reducing the premium significantly.

Having more lower priced products on the market would allow a faster turnover rate, and avoid stagnation within the precious metals market. Gold can now be traded without the hassle of moving cross-border between countries. Allowing customers to easily trade precious metals via the platform helps to provide liquidity to the market.

“Every additional exchange in a new country will also provide extra liquidity to the entire market. This can be achieved with our swap system, whereby liquidity from one exchange can be accumulated with the liquidity from other exchanges,” said the team.

“The more countries with our presence, the better the overall market will become due to shared liquidity. Therefore, Nubex’s expansion is not just an option; it’s a prerequisite for the market to work at its full potential.”

  • You can read more about Nubex Exchange here, or check it out for yourself here.

This article was written in collaboration with Nubex.

 

Subscribe to Vulcan Post Newsletter

Stay updated with our weekly curated news and updates.