10 things you should know before you trade gold in Kenya
As in all other markets around the world, the Kenyan gold trading market offers lucrative opportunities. This is especially the case in Kenya, where rich mineral resources and growing interest in precious metals are thriving on the national market.
But before engaging in gold trading in Kenya, there are some important things to understand about the sector and the various factors which impacts gold trading, which can help you in succeeding in your trading and mitigating risks. This article should be seen as a stepping stone into more comprehensive research into the gold trading market in Kenya.
You should have a solid grasp of the market dynamics before you dive deep into gold trading in Kenya. Many global economic conditions influence gold prices, including geopolitical events and currency fluctuations. Furthermore, local factors in Kenya also influence the prices, including mining policies, trade regulations, and market demand.
There are several bodies in Kenya regulating the industry, including the Ministry of Mining and the Kenya Revenue Authority (KRA). It is not possible for you to legally trade gold until you obtain the necessary licenses and permits from these entities. This includes a mining permit if you plan to mine yourself, or if your interest is to purchase and sell gold then you need a trading licence.
You should understand the local setup of the gold trade before you get started. For example, in Kenya, gold trade often involves middlemen. What these middlemen do is to facilitate transactions between miners and buyers. The services of middlemen are valuable, but there can be extra costs and potential complications involved with these middlemen.
The quality of gold can be measured in either karats or fineness. The purest gold is 24 karats. This is important information to keep in mind when trading gold, as you should be able to verify the purity and quality of the gold you are buying and selling. You always want to make sure you are getting what you are paying for. Gold purity testing in Kenya can be done in various ways, including assay testing. Research the methods and ensure you establish good relationships with reputable assayers, so you maintain integrity in all your transactions.
It is always recommended to conduct thorough market research to understand the prevailing gold prices and trends. There are many factors influencing the fluctuation of gold prices. This includes supply and demand, geopolitical tensions, and economic indicators. You should also consider that local gold prices in Kenya might be influenced by other factors as well. Transportation costs and local demand can have localised impacts on gold prices.
There are always inherent risks when you trade gold, especially price volatility and potential fraud. To mitigate these risks, you should always implement risk management strategies, to protect your investments. Such strategies could include diversifying your investments and setting up stop-loss orders. You can also ensure the security of your gold assets by storing them in a secure facility, and by using reputable dealers. If you are a new trader, you should pay extra attention to scams and fraudsters who might want to take advantage of your inexperience.
All types of gold trading activities in Kenya are subject to taxation. KRA imposed taxes on gold transactions. These taxes include Value Added Tax (VAT) and Capital Gains Tax (CGT). It is recommended that you keep track of your transactions, so you comply with tax regulations and pay what you owe based on your activities. In this way, you avoid penalties and live up to your tax obligations. You should also consider the financial implications when trading. Such factors include transaction costs, storage fees, and potential investment returns.
There are extensive social and environmental impacts related to gold mining. Artisanal and small-scale mining in Kenya leads to deforestation, water pollution, and other ecological issues. Furthermore, the working conditions in some mines are breaking human right standards. This makes it crucial to support sustainable and ethical mining practices, but also to continuously stay aware of the social implications of your trading activities.
Having a strong network of contacts within the industry is key for successful gold trading. For a network to be successful, you should be in regular contact with miners, buyers, assayers, and regulatory officials. By networking, you can gain valuable insights, opportunities, and support while navigating the complexities of the gold market.
The gold market continues to evolve and stay dynamic, making it crucial to stay updated on industry trends, technological advancements, and regulatory changes. You should continue to stay curious and extend your knowledge through courses, workshops, and industry publications, while also adapting your trading strategies based on new information and market developments.
If you are interested in trading gold in Kenya, there are exciting opportunities for you. However, this would also require careful consideration and planning on your part, since it is important to understand the market dynamics, comply with regulations, manage risks, and take into consideration the local conditions which influence the gold trading prices.
Source: https://www.businessdailyafrica.com/