Since the financial crisis, business has been booming for companies that buy gold from private sellers. Danske Guldhandlere (DG), an industry interest organisation comprising seven of the biggest players and representing more than half of the gold trading in Denmark, estimates that the price of gold in Denmark increased by more than 300 percent in a matter of years.
But DG also claims that this has given rise to unethical conduct in the market. Dennis Lindberg, the chairman of DG, described an influx of foreign companies that don’t play by the Danish rules. “Our main concern is that there isn’t a level playing field. Either everyone should follow the rules or no-one should follow the rules. Our business has a bit of a dodgy reputation and we want to clean it up,” he said.
“The rules are more liberal in other countries. In some places you can open up a shop and trade in gold, completely unregulated. But in Denmark, there are minimum standards. You need to be approved by the police, you need a licence and you need to operate from fixed premises.”
Guldexpressen.dk ApS, which started trading in Denmark in 2012, is a Danish gold trader owned by the Swedish company Guldbrev AB. It claims to have more than 100,000 satisfied customers across the Nordic countries.
On May 27, DG reported Guldexpressen.dk to the Danish police, alleging violation of Law number 223 of 08/06/1966 relating to the trade of second-hand goods and pawnbroking. Guldexpressen operates a trading model whereby the transaction takes place exclusively online and by post. DG questioned whether Guldexpressen.dk was licenced and alleged that, without a physical place of business, Guldexpressen.dk could not satisfy the criteria to qualify for a licence.
The DG spokesman Nicolai Rossen also alleges that the price Guldexpressen.dk pays for the gold it purchases is far below market value. “We believe it pays customers less for their gold than what is ethically sound to do,” he said.
Guldbrev AB, a shareholder of Guldexpressen.dk, intimated to DG in mid-June that the Danish company would be exiting the Danish market.
No business to protect
Magnus Johansson, the head of Guldbrev AB, confirms that it would be liquidating Guldexpressen.dk. He denies, however, that the DG’s reporting of the company to the Danish police is the reason for the move. “That’s not the reason we’re leaving the market,” he said.
“The company has not been performing, the Danish market is too small and the costs are too great. So we don’t feel that it’s worth maintaining the business. We don’t feel there’s a business to protect.”
Johansson also maintains that the business model is feasible according to European Union laws. “The European courts have always ruled that the European laws apply over local laws, so if we felt there was a reason to continue, we would do so.”
Johansson did not wish to comment on the opinions DG expressed regarding the prices Guldexpressen.dk pays for gold. “That’s their opinion,” he said.
Guldexpressen.dk, according to Johansson, is in the process of being wound up – a process he expects to be completed by September.
Guldexpressen.dk is not the first large company to leave the Danish market in the past year. In October, Ekstra Bladet reported that Brevguld.dk, owned by a company from the Isle of Man, had also wound up its operations following years of buying gold at well below the market value.
Rossen sees these developments as being positive for the industry. “This is a clear sign that gold prices are finding a more stable level with the world economy,” he said.
“It also shows that the work that we as an organisation have put in – exposing the bad seeds of the business – has increased the transparency of the market. Danes now know a lot more about what their gold is worth, and prior to our work they really didn't.”