A-Mark Precious Metals, Inc. (AMRK): Business Model Canvas [11-2024 Updated]

In the dynamic world of precious metals trading, A-Mark Precious Metals, Inc. (AMRK) stands out with a robust business model that integrates key partnerships, diverse customer segments, and innovative services. This Business Model Canvas reveals how AMRK not only captures value through competitive pricing and comprehensive offerings but also fosters strong relationships with both retail investors and financial institutions. Discover how AMRK navigates the complexities of the precious metals market and what sets it apart from its competitors.

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Key Partnerships

Relationships with U.S. Mint and other mints

A-Mark Precious Metals, Inc. is an authorized purchaser of gold, silver, platinum, and palladium coins from the U.S. Mint. This relationship allows A-Mark to acquire these products directly and sell them to its customers, thus ensuring a steady supply of precious metals. As of September 30, 2024, the company's inventory held for sale included approximately $467.9 million in precious metals.

In addition to the U.S. Mint, A-Mark also collaborates with various other sovereign mints, which further diversifies its sourcing capabilities. This strategy helps the company mitigate supply chain risks and maintain competitive pricing for its offerings.

Partnerships with financial institutions for hedging

A-Mark has established partnerships with several financial institutions to facilitate its hedging activities. The company entered into a Trading Credit Facility with a total revolving commitment of up to $422.5 million. As of September 30, 2024, the outstanding borrowings under this facility amounted to $337 million. This facility is vital for managing liquidity and funding the purchase of precious metals.

Moreover, A-Mark uses derivative instruments, including forward and futures contracts, to hedge against price fluctuations in precious metals. The notional amounts of these contracts as of September 30, 2024, were approximately $803.7 million for forward contracts and $189.3 million for futures contracts.

Collaborations with precious metals dealers

A-Mark collaborates with various precious metals dealers to enhance its distribution network. This collaboration allows A-Mark to expand its market reach and improve sales through wholesale channels. For the three months ended September 30, 2024, the company's revenues from wholesale sales and ancillary services segment reached approximately $2.55 billion.

The company benefits from these partnerships by gaining access to a broader customer base and leveraging the dealers’ networks for more efficient distribution of its products.

Affiliations with logistics and storage service providers

A-Mark has established affiliations with logistics and storage service providers to support its operations. The company utilizes these services for the secure transportation and storage of precious metals. As of September 30, 2024, A-Mark's product financing arrangements accounted for $541.7 million, which includes costs associated with storage and logistics.

Additionally, A-Mark's subsidiaries, such as A-M Global Logistics, LLC, focus on providing comprehensive logistics solutions, ensuring that the precious metals are delivered safely and efficiently to clients and partners alike.

Partnership Type	Details	Financial Impact (as of Sept 30, 2024)
U.S. Mint	Authorized purchaser of precious metals	Inventory held for sale: $467.9 million
Financial Institutions	Trading Credit Facility of $422.5 million	Outstanding borrowings: $337 million
Derivative Contracts	Hedging through forward and futures contracts	Forward contracts: $803.7 million Futures contracts: $189.3 million
Precious Metals Dealers	Collaboration for distribution	Wholesale revenues: $2.55 billion
Logistics and Storage	Affiliations for transportation and storage	Product financing arrangements: $541.7 million

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Key Activities

Trading and selling precious metals

A-Mark Precious Metals, Inc. engages in trading and selling a variety of precious metals, including gold and silver. For the three months ended September 30, 2024, the company sold 398,000 ounces of gold, a decrease of 19.6% from 495,000 ounces sold in the same period in 2023. Silver sales also decreased significantly, with 20,449,000 ounces sold compared to 30,378,000 ounces in the previous year, marking a decline of 32.7%.

Despite the decrease in volume, the average selling prices for gold and silver increased by 26.5% and 24.5%, respectively, contributing to an overall revenue of $2.715 billion for the period, an increase of 9.3% from $2.485 billion in the same quarter of 2023.

Offering secured loans for precious metals purchases

A-Mark provides secured loans primarily collateralized by precious metals, numismatic materials, and graded sports cards. As of September 30, 2024, the total secured loans receivable stood at $101.9 million, down from $113.1 million at the end of June 2024. The breakdown of secured loans by portfolio class indicates that bullion loans accounted for $45.5 million (44.6%), numismatic loans for $48.1 million (47.2%), and graded sports cards for $8.3 million (8.2%).

Additionally, the company monitors the loan-to-value (LTV) ratios, with 94.4% of loans having an LTV ratio of less than 75%, which are considered higher quality loans.

Providing storage and fulfillment services

A-Mark also offers storage and fulfillment services for precious metals. As of September 30, 2024, the company's inventories, including precious metals held under financing arrangements, totaled $1.304 billion, reflecting an increase from $1.119 billion at the end of June 2024. The storage services are supported by significant commitments, with open inventory purchase commitments reported at $751.0 million and open inventory sales commitments at $(410.0) million.

The company also manages customer consignment arrangements, with $2.8 million of inventory loaned to customers as of September 30, 2024, compared to $2.4 million in June 2024.

Inventory hedging through futures and forward contracts

A-Mark employs a comprehensive hedging strategy to manage the risks associated with price fluctuations in precious metals. As of September 30, 2024, the company had precious metals forward contracts valued at approximately $803.7 million and futures contracts valued at $189.3 million. The total market value of derivative financial instruments was $992.9 million.

The company reported net losses on derivative instruments of $22.3 million for the quarter, which were substantially offset by changes in the fair market value of the underlying precious metals inventory.

Category	September 30, 2024	June 30, 2024
Gold Ounces Sold	398,000	495,000
Silver Ounces Sold	20,449,000	30,378,000
Secured Loans Receivable	$101.9 million	$113.1 million
Total Inventories	$1.304 billion	$1.119 billion
Forward Contracts Value	$803.7 million	$843.4 million
Futures Contracts Value	$189.3 million	$83.2 million
Total Market Value of Derivative Financial Instruments	$992.9 million	$926.7 million

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Key Resources

Diverse inventory of precious metals

A-Mark Precious Metals, Inc. maintains a robust inventory of precious metals, which is crucial for its operations. As of September 30, 2024, the total inventory was valued at $1.277 billion, comprising:

Inventory Component	Value (in thousands)
Inventory held for sale	$467,898
Repurchase arrangements with customers	$222,230
Consignment arrangements with customers	$2,837
Commemorative coins	$3,103
Borrowed precious metals	$39,487
Product financing arrangements	$541,744

Experienced management team

The leadership at A-Mark is composed of experienced professionals with deep industry knowledge. Their expertise spans trading, e-commerce, logistics, and financial services, which enhances the company's operational effectiveness. The management team has a proven track record in navigating market fluctuations and optimizing business strategies.

Advanced trading and e-commerce platforms

A-Mark utilizes sophisticated trading and e-commerce platforms to facilitate transactions efficiently. The company has invested significantly in technology to support its operations. For instance, the Trading Credit Facility, established at $350 million and increased to $422.5 million, allows for substantial liquidity to manage trading activities.

Strong relationships with suppliers and financial institutions

A-Mark's success is bolstered by its strong relationships with various suppliers and financial institutions. The company sources precious metals from a diverse array of suppliers, ensuring flexibility and reliability in its supply chain. Notable customers include HSBC Bank, which accounted for 21.3% of total revenue in Q3 2024, and Morgan Stanley, contributing 12.7%. This customer concentration demonstrates A-Mark's significant partnerships in the industry, enhancing its market position.

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Value Propositions

Competitive pricing for precious metals

A-Mark Precious Metals, Inc. (AMRK) implements competitive pricing strategies that reflect the current market dynamics of precious metals. As of September 30, 2024, the average selling prices for gold increased by 26.5% and for silver by 24.5% compared to the previous year, despite a decline in the volume of metals sold. The company generated revenues of $2.715 billion for the three months ending September 30, 2024, marking a 9.3% increase from $2.485 billion in 2023.

Comprehensive services including trading, storage, and financing

A-Mark provides a wide range of services that encompass trading, storage, and financing of precious metals. The company operates through three segments: Wholesale Sales & Ancillary Services, Direct-to-Consumer, and Secured Lending. For the three months ending September 30, 2024, the Wholesale Sales & Ancillary Services segment generated revenues of $2.227 billion, reflecting a 3.1% increase year-over-year. Additionally, the company has 562 secured loans outstanding at the end of the period, demonstrating its capacity to provide financing options to customers.

High-quality customer support and education

A-Mark emphasizes high-quality customer support and education initiatives. The number of new customers increased by 41.4% to 55,300 during the three months ending September 30, 2024. This growth reflects the effectiveness of their customer service and educational efforts, which aim to enhance the customer experience and promote informed investment decisions. The average order value for Direct-to-Consumer transactions rose to $2,967, up 21.6% from the previous year.

Access to a wide range of investment products

A-Mark provides access to a diverse portfolio of investment products, including precious metals and numismatic materials. The company reported sales of 398,000 ounces of gold and 20,449,000 ounces of silver during the three months ending September 30, 2024, despite a decrease in the overall volume sold. The company’s total assets reached $2.029 billion as of September 30, 2024. The company's strategic acquisitions, such as the controlling interest in Silver Gold Bull, have expanded its product offerings and customer base.

Metric	Q3 2024	Q3 2023	Change (%)
Average Selling Price - Gold	$X,XXX	$X,XXX	26.5%
Average Selling Price - Silver	$X,XXX	$X,XXX	24.5%
Revenues	$2.715 billion	$2.485 billion	9.3%
Secured Loans	562	803	(30.0%)
Gold Ounces Sold	398,000	495,000	(19.6%)
Silver Ounces Sold	20,449,000	30,378,000	(32.7%)

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Customer Relationships

Direct engagement through e-commerce platforms

A-Mark Precious Metals has significantly enhanced its customer engagement through its e-commerce platforms. As of September 30, 2024, the number of total customers increased by 734,700, or 30.8%, totaling 3,122,100 compared to 2,387,400 in the previous year. The Direct-to-Consumer ticket volume rose by 30,221 tickets, or 22.2%, reaching 166,578 tickets during the same period. The average order value for Direct-to-Consumer transactions increased by $527, or 21.6%, to $2,967 from $2,440 in 2023.

Personalized services for high-value clients

A-Mark offers tailored services to high-value clients, including dedicated account management and customized investment strategies. The company's gross profit from the Direct-to-Consumer segment for the three months ended September 30, 2024, was $23.5 million, representing 4.8% of revenue, an increase of 11.4% from the previous year. The increase in active Direct-to-Consumer customers was 23,500, or 22.1%, reaching 129,900. This growth indicates the effectiveness of personalized services in retaining and attracting high-value clients.

Educational resources about precious metal investments

A-Mark provides extensive educational resources to help customers understand precious metal investments. The company has seen a rise in new Direct-to-Consumer customers, increasing by 16,200, or 41.4%, to a total of 55,300. This educational approach not only empowers customers but also enhances their engagement and loyalty to the brand. A-Mark's strategic focus on customer education is reflected in their educational content, which drives informed purchasing decisions and fosters long-term relationships with clients.

Loyalty programs for repeat customers

A-Mark has implemented loyalty programs aimed at rewarding repeat customers. The increased engagement is evident as the company reported a rise in Direct-to-Consumer ticket volume from pre-existing customers by 16,235 tickets, or 14.5%, totaling 128,032. Additionally, the company's revenues for the three months ended September 30, 2024, rose by $230.5 million, or 9.3%, to $2.715 billion, with repeat business contributing significantly to this growth.

Metric	Q3 2024	Q3 2023	Change
Total Customers	3,122,100	2,387,400	+734,700 (30.8%)
Active Customers	129,900	106,400	+23,500 (22.1%)
New Customers	55,300	39,100	+16,200 (41.4%)
Total Ticket Volume	166,578	136,357	+30,221 (22.2%)
Average Order Value	$2,967	$2,440	+$527 (21.6%)

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Channels

Direct-to-consumer sales via websites

A-Mark Precious Metals, Inc. operates a robust direct-to-consumer sales channel primarily through its e-commerce platforms. For the three months ended September 30, 2024, the Direct-to-Consumer segment generated revenues of approximately $488.1 million, an increase from $325.5 million for the same period in 2023 . This growth reflects the company's strategic focus on online sales, facilitating customer access to gold, silver, and other precious metals directly through their websites.

Wholesale distribution to financial institutions and dealers

The Wholesale Sales & Ancillary Services segment is another vital channel for A-Mark. In the same quarter, this segment accounted for revenues of $2.5 billion, after eliminating inter-segment sales . Key customers include major financial institutions such as HSBC Bank, which contributed $578.8 million (21.3% of total revenue) in Q3 2024, and Morgan Stanley, which accounted for $345.1 million (12.7% of total revenue) . This channel serves as a primary revenue driver, leveraging relationships with dealers and institutions to distribute precious metals effectively.

Online marketplaces and trading platforms

A-Mark also utilizes online marketplaces and trading platforms to enhance its distribution capabilities. The company provides a platform for customers to trade precious metals, which facilitates higher transaction volumes. This approach is supported by its trading capabilities that allow customers to engage in transactions 24/7, thus catering to a global audience and meeting the needs of various market participants .

Direct marketing and advertising campaigns

To bolster its brand presence and customer acquisition, A-Mark engages in direct marketing and advertising campaigns. These initiatives include digital marketing strategies that target specific customer segments interested in precious metals investment. The effectiveness of these campaigns is reflected in the overall revenue growth, with total revenues reaching $2.7 billion for the three months ended September 30, 2024, up from $2.5 billion in the previous year .

Channel	Revenue Q3 2024 (in millions)	Revenue Q3 2023 (in millions)	Growth (%)
Direct-to-Consumer	$488.1	$325.5	50.0%
Wholesale Distribution	$2,547.998	$2,387.324	6.7%
Total Revenues	$2,715.096	$2,484.618	9.3%

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Customer Segments

Retail investors and collectors

A-Mark Precious Metals, Inc. primarily serves retail investors and collectors through its Direct-to-Consumer segment, which includes subsidiaries like JM Bullion, Goldline, and Precious Metals Purchasing Partners. For the three months ended September 30, 2024, the Direct-to-Consumer segment generated revenues of $488.1 million, representing a 49.9% increase from $325.5 million in the same period in 2023. The average order value increased to $2,967, a 21.6% rise compared to the previous year. The number of new customers surged by 41.4% to 55,300.

Financial institutions and asset managers

A-Mark also caters to financial institutions and asset managers, providing them with precious metals for investment purposes. The company reported that sales to significant clients like HSBC Bank and Morgan Stanley accounted for approximately 34% of total revenues. As of September 30, 2024, HSBC contributed $578.8 million (21.3% of total revenues), while Morgan Stanley accounted for $345.1 million (12.7% of total revenues).

Coin and bullion dealers

The coin and bullion dealer segment is a critical customer base for A-Mark. The company provides wholesale services to these dealers, which includes a variety of products such as gold and silver coins and bars. For the three months ended September 30, 2024, the Wholesale Sales & Ancillary Services segment generated revenues of $2.227 billion, reflecting an increase from $2.159 billion in 2023. The total ticket volume for wholesale sales increased by 34.5% year-over-year.

Industrial manufacturers requiring precious metals

A-Mark serves industrial manufacturers that require precious metals for production processes. The company’s product financing arrangements and secured loans allow these manufacturers to acquire necessary materials while managing cash flow effectively. As of September 30, 2024, the inventory held for sale amounted to $467.9 million, with product financing arrangements totaling $541.7 million. The total value of precious metals subject to price risk was reported at $992.1 million.

Customer Segment	Revenue (3 months ended Sept 30, 2024)	Revenue Change (%)	Average Order Value	New Customers	Key Clients
Retail Investors and Collectors	$488.1 million	49.9%	$2,967	55,300	—
Financial Institutions and Asset Managers	$923.9 million	—	—	—	HSBC, Morgan Stanley
Coin and Bullion Dealers	$2.227 billion	—	—	—	—
Industrial Manufacturers	$541.7 million (Product Financing)	—	—	—	—

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Cost Structure

Costs of Purchasing Precious Metals

The costs of purchasing precious metals are a significant portion of A-Mark Precious Metals, Inc.'s operational expenses. As of September 30, 2024, the cost of sales amounted to approximately $2.672 billion, reflecting the direct costs associated with the acquisition and handling of precious metals . This figure includes both gold and silver purchases, with average selling prices for gold and silver increasing by 26.5% and 24.5%, respectively, compared to the previous year.

Operational Expenses for Trading and Logistics

Operational expenses for trading and logistics include costs related to the trading of precious metals and the logistics of handling inventory. For the three months ended September 30, 2024, the selling, general, and administrative expenses totaled $26.6 million, which is a 21.8% increase from $21.8 million in the same period of the previous year . The increase in operational expenses was attributed to higher compensation expenses, including performance-based accruals, as well as increased advertising and consulting costs .

Expense Category	Amount (in thousands)	Percentage of Revenue
Cost of Sales	$2,671,653	98.4%
Selling, General, and Administrative Expenses	$26,617	0.98%
Depreciation and Amortization	$4,709	0.17%

Marketing and Customer Acquisition Costs

Marketing and customer acquisition costs are also critical to A-Mark's business model. The increase in selling, general, and administrative expenses indicates a rise in marketing efforts. The advertising costs alone increased by approximately $0.7 million during the three months ended September 30, 2024 . The company saw a significant rise in customer metrics, with new customers increasing by 41.4% to 55,300 . This growth can be linked to enhanced marketing initiatives aimed at expanding the customer base in the Direct-to-Consumer segment.

Interest Expenses on Secured Loans and Credit Facilities

Interest expenses associated with secured loans and credit facilities also contribute to the overall cost structure. For the three months ended September 30, 2024, interest expenses increased to $9.987 million, a rise of 1.7% from $9.823 million in the same period in 2023 . The increase is attributed to higher interest and fees from product financing arrangements as well as inter-segment eliminations related to the Direct-to-Consumer segment's financing activities .

Type of Interest Expense	Amount (in thousands)	Percentage of Revenue
Interest Expense	$9,987	0.37%

A-Mark Precious Metals, Inc. (AMRK) - Business Model: Revenue Streams

Sales of precious metals and numismatic products

A-Mark Precious Metals generates substantial revenue from the sale of precious metals. For the three months ended September 30, 2024, total revenues reached $2.715 billion, an increase of 9.3% from $2.485 billion in the same period of the prior year. This growth was driven by higher average selling prices, despite a decrease in the volume of metals sold.

Specifically, gold ounces sold decreased by 19.6% to 398,000 ounces from 495,000 ounces, while silver ounces sold fell by 32.7% to 20,449,000 ounces from 30,378,000 ounces.

Product	Ounces Sold (Q3 2024)	Ounces Sold (Q3 2023)	Change (%)
Gold	398,000	495,000	-19.6%
Silver	20,449,000	30,378,000	-32.7%

Interest income from secured loans

The company also earns interest income from secured loans. For the three months ended September 30, 2024, interest income amounted to $7.1 million, an increase of 16.1% compared to $6.1 million in the previous year. As of the same date, the number of secured loans at period end was 562, down from 803 in the prior year, reflecting a 30.0% decrease.

Fees for storage and fulfillment services

A-Mark provides storage and fulfillment services, generating additional revenue. Although specific figures for storage and fulfillment fees are not detailed in the available data, these services are integral to the company's overall operations, particularly for customers utilizing secured loans and other financing options. The overall gross profit for the three months ended September 30, 2024, was $43.4 million, down from $49.4 million in 2023, indicating the impact of lower trading profits across segments.

Revenue from advertising on digital platforms

The company has diversified its revenue streams by generating income through advertising on digital platforms. While specific revenue figures from advertising are not provided in the available data, this segment is expected to contribute positively to overall revenues, especially given the increased customer base and digital engagement metrics observed in recent quarters. A-Mark's customer base grew by 30.8% year-over-year, reaching 3,122,100 total customers as of September 30, 2024.

Updated on 16 Nov 2024

Resources:

1. A-Mark Precious Metals, Inc. (AMRK) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of A-Mark Precious Metals, Inc. (AMRK)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View A-Mark Precious Metals, Inc. (AMRK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.