My Awful Experience With Midwest Refineries

[Kamchi]

So, I sent "Midwest Refineries" 14.3g of 14k gold. I used a calculator and everything to determine the value at the market price they received and declared at, $2,174 per troy ounce of pure gold. Obviously, 14k is not pure gold, my pieces were 585 and "ZRW" marked, so legitimate pieces. Take that 14.3g and multiply it by .585 because only 58.5% of it is pure gold. You are left with 8.37g of pure gold at a market price of $2,174 per troy ounce. That comes out to be valued at $585.03. Of course, "Midwest Refineries" have to make money, so they take 5%. That should leave me with $555.78.

Now, what I actually got,
I received a check for only $475, $110.03 less than its actual value and $80.78 less than I should have got after their 5% fee. Overall, I lost 19%. I was under the impression it would be 5%, what a shock I got!

Gary (the owner of "Midwest Refineries") reasonings:
-Well, although your gold was marked as "585," 58.5% pure gold, it was only 54% pure
-Then once we found out the purity, we lost 4% of it during the melting process

I will never use them again and heed this warning because you will lose a lot of money!

-I shipped my gold to them on 03/08/24, it arrived on 03/11/24, my check arrived on 03/15/24.
-The "market price" declaration was correct and done so "in good faith," ($2,174 per troy ounce of pure gold on the date of which they received it)
-The website falsely advertises you only lose 5%, I lost 19%, from my overall gold's value.
-The purity assessment and mass loss during melting is not corroborated in any credible way. It is merely stated by him and you're supposed to take his word.

I feel as if I was scammed and baited by "false advertisement." I would like the remainder of the money I'm owed or for verifiable evidence to prove his valuation, otherwise. The company should also have to mention these "apparent" other ways in which your valuation will go down on their website.

 

[FrugalRefiner]

Kamchi, welcome to the forum. Sorry you had a bad experience. I have nothing to do with Midwest Refineries, but let me offer a bit of insight.

Gold stamping regulations have historically been fairly lax. From the early days, manufacturers were allowed a half karat tolerance on the karat of the goods they produced because that was the general limit for accuracy. If an item had solder involved, another half karat tolerance was allowed. Although these laws have been tightened over the years, you usually don't know how old a piece is or the standards in place when it was made. Add to that, that anyone who wants to make jewelry can buy a stamp that says 14K, or 585, or whatever they choose, make whatever alloy they want, and stamp it.

I'm just saying you can't totally rely on the stamping on jewelry. I have several pretty chains all stamped 14K that are just plated junk.

Dave

 

[Kamchi]

Kamchi, welcome to the forum. Sorry you had a bad experience. I have nothing to do with Midwest Refineries, but let me offer a bit of insight.

Gold stamping regulations have historically been fairly lax. From the early days, manufacturers were allowed a half karat tolerance on the karat of the goods they produced because that was the general limit for accuracy. If an item had solder involved, another half karat tolerance was allowed. Although these laws have been tightened over the years, you usually don't know how old a piece is or the standards in place when it was made. Add to that, that anyone who wants to make jewelry can buy a stamp that says 14K, or 585, or whatever they choose, make whatever alloy they want, and stamp it.

I'm just saying you can't totally rely on the stamping on jewelry. I have several pretty chains all stamped 14K that are just plated junk.

Dave

Thank you!

My issue arises when comparing to other's valuations, mine seemed incredibly low. Also I'm not a big fan of "just take my word." Also losing 4% in the melting process seems a bit extreme and embellished. My gold was stamped "ZRW" as well, the trademark of "Jewels America Inc., NYC," I only buy from reputable dealers. I figured I'd warn the members here, as the owner of "Midwest Refineries" did not care at all. I can only imagine if I sent in more, like, a lot more

 

[Kamchi]

A little extra irony, 14.31g of 14k gold or 0.46 of a troy ounce, 4% of that was lost from melting, that decreases the weight down to 13.74g of 14k gold. Now, that 14k gold isn't actually 58.5% pure gold, it is only 54% pure gold. That leaves me with 7.42g of pure gold. Their fee is 5%, so now I'm left with 7.05g of pure gold. Considering the $2,174 troy ounce price. When you do the math I should have received $492.76. I only received $475. Assuming he is not lying at all and I trust his word 100%, he still owes me $17.76

 

[Kamchi]

Nothing was itemized either, it was just bought outright and assumptions made

 

[hoytSmith]

“Refine losses” are presumed — you’re charged a set percentage per the terms you accepted.

“Actual metal content” is by their assay, not any stamp or your own assay. Per the terms you accepted.

Pre-set fees are in the terms, as are percentages of metal retained/returned.

Refiners are like banks — they fo business on their own terms unless you can make them so much money that they’re willing to accept yours.

I did not enjoy my experience(s) with Midwest refineries and I will not do business with them again, but — I understand the risks that come with taking small lots of unknown origin presented by complete strangers.

A personal recommendation is helpful, but I don’t expect to get favorable terms unless you have enough history with someone that they don’t need to account for the insecurity that comes with dealing with people they don’t know.

I’m gonna say “keep your gold, make connections, build relationships — and you’ll likely find others who have done the same and you can help each other out.

 

[Kamchi]

“Refine losses” are presumed — you’re charged a set percentage per the terms you accepted.

“Actual metal content” is by their assay, not any stamp or your own assay. Per the terms you accepted.

Pre-set fees are in the terms, as are percentages of metal retained/returned.

Refiners are like banks — they fo business on their own terms unless you can make them so much money that they’re willing to accept yours.

I did not enjoy my experience(s) with Midwest refineries and I will not do business with them again, but — I understand the risks that come with taking small lots of unknown origin presented by complete strangers.

A personal recommendation is helpful, but I don’t expect to get favorable terms unless you have enough history with someone that they don’t need to account for the insecurity that comes with dealing with people they don’t know.

I’m gonna say “keep your gold, make connections, build relationships — and you’ll likely find others who have done the same and you can help each other out.

I really appreciate the advice but I decided I'm going to try to liquidate all my precious metals in general. I realized liquidity is the most important thing and even if price goes up, you will lose like 20% due to that being just how the industry is. It eats all your profits away. I'm going to stick with high volume high liquidity stocks to invest my money into. Cheers

 

[4metals]

I am actually quite surprised Midwest actually took in a job that, if all went perfect, no losses and plumb gold, is only worth $584.72. At those numbers Midwest only stood to profit $29.23.

The job had to be melted, and at that size it is likely done with a torch. (And with a torch the smallest bead either spit out or remaining in the melt dish, can represent their entire profit.) Then the bead has to be assayed, but likely that was by XRF. And finally the office had to be involved to cut the check and settle the job. And at that point, the refiner is left with a karat gold bead. It has to be refined, either at Midwest's expense if done in house, or shipped out as part of a larger lot, which comes with fee's.

Exactly how much profit, after salaries alone, for the people involved in processing and settling your lot, do you think is left? Usually small lots like you are talking about here are sold in jewelry stores where they tell you what you will be paid and you either make the deal or leave with your gold. Jewelry stores usually accumulate the gold until a larger lot is big enough to ship and send it out to someone like Midwest.

Like I said, I'm surprised they even accepted the lot.

 

[Kamchi]

I am actually quite surprised Midwest actually took in a job that, if all went perfect, no losses and plumb gold, is only worth $584.72. At those numbers Midwest only stood to profit $29.23.

The job had to be melted, and at that size it is likely done with a torch. (And with a torch the smallest bead either spit out or remaining in the melt dish, can represent their entire profit.) Then the bead has to be assayed, but likely that was by XRF. And finally the office had to be involved to cut the check and settle the job. And at that point, the refiner is left with a karat gold bead. It has to be refined, either at Midwest's expense if done in house, or shipped out as part of a larger lot, which comes with fee's.

Exactly how much profit, after salaries alone, for the people involved in processing and settling your lot, do you think is left? Usually small lots like you are talking about here are sold in jewelry stores where they tell you what you will be paid and you either make the deal or leave with your gold. Jewelry stores usually accumulate the gold until a larger lot is big enough to ship and send it out to someone like Midwest.

Like I said, I'm surprised they even accepted the lot.

I don't care about the margins and how small they are and how others try to get a little piece as they go down the chain and screw each other over. Don't make claims then that are not true. Don't mislead customer, whether they're selling jewelry, or scammed other people out of their scrap, accumulating to a large sum. Not everyone thinks investing in gold is a good idea. Especially due to the liquidity and losing majority of your profits if the price does indeed go up, when you sell it to a refiner. Again, if 5% is too little, say on your website 10%. If you need a minimum, don't say any size, big or small. It's pretty simple. Also if you do the math, at 4% mass loss and 54% pure, not 58.5%, he still shorted me. I will never invest in precious metals ever, good lesson about liquidity and the scamming that is the jewelry industry. I hope others wisen up to this as well. Also mass loss will eventually be recovered, especially if it's all "in-house." It doesn't magically vanish into thin air. 4% is quite a lot too, it is usually less than that. You're entitled to your opinion about this matter, but that is just it, an opinion. Congrats on hoarding gold too, I'll stick to my high liquidity stocks

 

[Darkthirty]

I am actually quite surprised Midwest actually took in a job that, if all went perfect, no losses and plumb gold, is only worth $584.72. At those numbers Midwest only stood to profit $29.23.

The job had to be melted, and at that size it is likely done with a torch. (And with a torch the smallest bead either spit out or remaining in the melt dish, can represent their entire profit.) Then the bead has to be assayed, but likely that was by XRF. And finally the office had to be involved to cut the check and settle the job. And at that point, the refiner is left with a karat gold bead. It has to be refined, either at Midwest's expense if done in house, or shipped out as part of a larger lot, which comes with fee's.

Exactly how much profit, after salaries alone, for the people involved in processing and settling your lot, do you think is left? Usually small lots like you are talking about here are sold in jewelry stores where they tell you what you will be paid and you either make the deal or leave with your gold. Jewelry stores usually accumulate the gold until a larger lot is big enough to ship and send it out to someone like Midwest.

Like I said, I'm surprised they even accepted the lot.

According to the statement, it doesn't appear that it was refined immediately. Possibly an XRF assay. Regardless, the terms and conditions should be spelled out before shipment, not arbitrarily added. I write contracts on a regular basis and any known unknowns are included in the text.

 

[Yggdrasil]

I don't care about the margins and how small they are and how others try to get a little piece as they go down the chain and screw each other over. Don't make claims then that are not true. Don't mislead customer, whether they're selling jewelry, or scammed other people out of their scrap, accumulating to a large sum. Not everyone thinks investing in gold is a good idea. Especially due to the liquidity and losing majority of your profits if the price does indeed go up, when you sell it to a refiner. Again, if 5% is too little, say on your website 10%. If you need a minimum, don't say any size, big or small. It's pretty simple. Also if you do the math, at 4% mass loss and 54% pure, not 58.5%, he still shorted me. I will never invest in precious metals ever, good lesson about liquidity and the scamming that is the jewelry industry. I hope others wisen up to this as well. Also mass loss will eventually be recovered, especially if it's all "in-house." It doesn't magically vanish into thin air. 4% is quite a lot too, it is usually less than that. You're entitled to your opinion about this matter, but that is just it, an opinion. Congrats on hoarding gold too, I'll stick to my high liquidity stocks

If you invest in precious metals, you buy certified bars, not scrap!

 

[4metals]

According to the statement, it doesn't appear that it was refined immediately. Possibly an XRF assay. Regardless, the terms and conditions should be spelled out before shipment, not arbitrarily added. I write contracts on a regular basis and any known unknowns are included in the text.

This is all true in terms of the contract and holding to it. All refiners hedge their metals so the massive 1/4 ounce bar was definitely not refined immediately.

My answer to the OP was not to stick up for the refiner because he did not live up to his terms, if terms were quoted. Usually smaller lots have different terms. But I just wanted to present the refiners side in terms of what it takes to process a lot.

 

[4metals]

This was copied and pasted off Midwest Refineries website;
"Midwest Refineries accepts all amounts of precious metals for purchase. In cases where customers may have just a few items they wish to sell, like an old gold school ring, or a couple of gold dental crowns etc., we will test the items and purchase them outright, eliminating the need for a melt and assay."

They make mention of a distinction of lots lower than 3 ounces. Based on what they say above, smaller lots are not melted (so where does a melt loss come from?). This makes more sense as small lots are barely profitable if they need the melt and analysis.

They do encourage small lots, but they don't seem to play by their own rules.

 

[Swissgoldrefiner]

So, I sent "Midwest Refineries" 14.3g of 14k gold. I used a calculator and everything to determine the value at the market price they received and declared at, $2,174 per troy ounce of pure gold. Obviously, 14k is not pure gold, my pieces were 585 and "ZRW" marked, so legitimate pieces. Take that 14.3g and multiply it by .585 because only 58.5% of it is pure gold. You are left with 8.37g of pure gold at a market price of $2,174 per troy ounce. That comes out to be valued at $585.03. Of course, "Midwest Refineries" have to make money, so they take 5%. That should leave me with $555.78.

Now, what I actually got,
I received a check for only $475, $110.03 less than its actual value and $80.78 less than I should have got after their 5% fee. Overall, I lost 19%. I was under the impression it would be 5%, what a shock I got!

Gary (the owner of "Midwest Refineries") reasonings:
-Well, although your gold was marked as "585," 58.5% pure gold, it was only 54% pure
-Then once we found out the purity, we lost 4% of it during the melting process

I will never use them again and heed this warning because you will lose a lot of money!

-I shipped my gold to them on 03/08/24, it arrived on 03/11/24, my check arrived on 03/15/24.
-The "market price" declaration was correct and done so "in good faith," ($2,174 per troy ounce of pure gold on the date of which they received it)
-The website falsely advertises you only lose 5%, I lost 19%, from my overall gold's value.
-The purity assessment and mass loss during melting is not corroborated in any credible way. It is merely stated by him and you're supposed to take his word.

I feel as if I was scammed and baited by "false advertisement." I would like the remainder of the money I'm owed or for verifiable evidence to prove his valuation, otherwise. The company should also have to mention these "apparent" other ways in which your valuation will go down on their website.

To be honest, 5% on gold for small amount looks correct, however as they adv for silver and PGM, pricing is very bad...
Anyway, many many refinery assay lower than what is inside. You can send 999.9 bullion to refinery and it comes out 98% from their assay...

 

[4metals]

You can send 999.9 bullion to refinery and it comes out 98% from their assay...

If a melt is witnessed and a duplicate sample assayed by the owner of the material, that issue simply does not exist. Of course a half ounce lot is way too small for that to even happen.

Refiners that ship larger lots and follow this protocol typically settle on the result that compromise between splitting limits. (Which, by definition, is what splitting limits means.) A typical refiners splitting limit is 1/8 of 1%. Lots whose results fall outside splitting limits are settled by an umpire assayer. The sample for the umpire is taken at the same time as the refiners sample and the customers sample and sealed up in case it is needed. The umpire lab to use is agreed on before the sample is shipped. and the loser pays for the umpire analysis. You don't want to lose an umpire assay because it isn't cheap. So make sure the lab you use is decent.

Professional refiners working on appropriately sized lots have worked out the system to eliminate any doubt.

 

[Lou]

I'm just glad to hear that Kamchi didn't send more.

Suffice it to say, my experience decades ago didn't leave me satisfied either. It did inspire me to start my own refinery.

 

[4metals]

If you invest in precious metals, you buy certified bars, not scrap!

This is the most prescient statement in this thread!

Not everyone thinks investing in gold is a good idea. Especially due to the liquidity and losing majority of your profits if the price does indeed go up, when you sell it to a refiner.

Gold or any other precious metal needs to be in a fungible form to be considered an investment. Buying and selling off a mere half ounce of karat scrap is not investing.

 

[shadybear]

I Just want to jump in here to keep the thread running and get my uninformed .02 in.
Where does the 19% come from?
5% for the refiner
and 4% melt loss
is 9% or 91% payout on 14.3 grams of karat gold
I think that sounds good 91%
You cant hold the refiner responsible for the karat gold purity
And the experts above and as an amateur I would agree no refinery is going to individually
refine every 15 grams of karat gold it buys,
so 4% may be just a set loss number
Buying scrap for an investment is possible but you do have to account for all the variables

Is this the first time you sent gold to a refiner?

 

[Alondro]

I'd refine such a small amount myself. A mere 14.3 grams would take only a couple 250ml beakers, a glass funnel, and some filter paper as far as equipment.

The only time I'd consider a professional refiner would be if I found a cache of karat gold hidden away in the basement wall of an old house... about the only way I can think I'd come across a large amount of it, lol.

 

[hoytSmith]

So, I sent "Midwest Refineries" 14.3g of 14k gold. I used a calculator and everything to determine the value at the market price they received and declared at, $2,174 per troy ounce of pure gold. Obviously, 14k is not pure gold, my pieces were 585 and "ZRW" marked, so legitimate pieces. Take that 14.3g and multiply it by .585 because only 58.5% of it is pure gold. You are left with 8.37g of pure gold at a market price of $2,174 per troy ounce. That comes out to be valued at $585.03. Of course, "Midwest Refineries" have to make money, so they take 5%. That should leave me with $555.78.

Now, what I actually got,
I received a check for only $475, $110.03 less than its actual value and $80.78 less than I should have got after their 5% fee. Overall, I lost 19%. I was under the impression it would be 5%, what a shock I got!

Gary (the owner of "Midwest Refineries") reasonings:
-Well, although your gold was marked as "585," 58.5% pure gold, it was only 54% pure
-Then once we found out the purity, we lost 4% of it during the melting process

I will never use them again and heed this warning because you will lose a lot of money!

-I shipped my gold to them on 03/08/24, it arrived on 03/11/24, my check arrived on 03/15/24.
-The "market price" declaration was correct and done so "in good faith," ($2,174 per troy ounce of pure gold on the date of which they received
-The website falsely advertises you only lose 5%, I lost 19%, from my overall gold's value.
-The purity assessment and mass loss during melting is not corroborated in any credible way. It is merely stated by him and you're supposed to take his word.

I feel as if I was scammed and baited by "false advertisement." I would like the remainder of the money I'm owed or for verifiable evidence to prove his valuation, otherwise. The company should also have to mention these "apparent" other ways in which your valuation will go down on their website.

Sorry, I took your calculations to be those presented to you by Midwest as a basis for a calculated settlement. Another post contains language that suggests that Midwest purchases small lots outright. If that’s true, your calculations are not material to the sale because you accepted a cash offer for the item.

I retract my advice to keep your gold. I do recommend that you consider the cost & risks associated with transacting business in small lots with strangers as you decide whether an offer is too good to be true or not. Sharp operators looking for rubes abound, and there’s lots of ways to drain you of valuables that don’t involve breaking the law. Sharp businesses rely on said rubes not reading — or reading but not understanding — the fine print and getting distracted by pictures of piles of gold and “You’re getting paid, Boss!” memes.

Play fair, be suspicious, and walk yourself through why you believe what you believe when you think you’ve been wronged. I think you didn’t get what you wanted or expected, but did you get what you bargained for? I suspect that you did. Consider the $80 a cheap, hard lesson. A really, really, really cheap lesson. If you fail to learn the right lesson, the remedial lesson may cost you much, much more. You’re not going to change Midwest Refineries or any other multi-million dollar enterprise. Do something else. I think you got lucky that you didn’t get disappointed to the tune of $5k for failing to read the terms. It happens every day. Good luck, seriously.