johndee23 said:
I know someone who is looking for a refinery to purchase his gold.
What refineries are the biggest, who does he need to get in touch with for the best prices?
He is being offered 99.5% of his gold and 99.75% of other metals in gold.
I personally know nothing about the industry but I think that is a garbage deal if he is producing that much gold every week. What are the best deals he can get, with what refineries?
he is essentially paying someone $2500 dollars per week to buy his gold from him... I KNOW there are better deals out there..... I hope this is the correct forum!
You're not just paying someone $2500 dollars per week to merely "buy" gold. There's a very technical service involved with that and it sure as hell isn't easy.
If they're making a gross of 0.5% on your friend's gold, let's see how much money that really is:
It's roughly about 7.80 or so per ounce to melt, pull a sample, analyze, digest, advance 90% on from their line, buy/short the option through a trading house, pay employees, pay environmental costs, chemical costs, rent utilities, overhead, insurance, armored car services and so on... yes, your friend has his costs too.
Let's just say that any company giving that rate can't afford to be doing any less than many thousands of ounces of fine per day, which means paying out probably 5-XX million daily in advances. Refining at that scale is part and parcel with big banking and the refiner is borrowing money at interest and leasing metal and having delivery contracts...ehh, it's a big machine with many cogs that need oiled.
I know there are better deals out there, but he's not doing
that much volume. People of his stature (in terms of volume moved) walk in and out of the doors of Metalor, Heraeus, RMC and that ilk every day. I think those are pretty decent rates, especially the very bizarre 99.75% of spot on other metals (which is VERY VERY unlikely on Pt/Pd and frankly, even silver). Don't get me wrong, sales reps will go to war over him, but there's always a line in the sand.
The refiner might sell it for a few dollars over spot in bulk or lease metal in their own right. Big deal. Making an additional $4-6K per thousand ounces (or per 1.58 M) isn't exactly a big return, given the investment.
Anyone who thinks running or owning a gold refinery is an easy cash cow is silly to the point of being an idiot. It is an absolutely great way to grow large sums of cash when the market is glutted with refining work. However, you're not making 2% weekly in the big leagues. It's all high finance. If you net 0.3% on your money weekly, it's about 15% a year. If you can spend 100 M a week, then it's not a bad gig. But God help you when the market tanks and you're doing it for practically nothing. When the price is low, people are less interested in selling their old jewelry and us refiners are stuck with industrial sources...and you're ready to call it quits on a weekly basis. So then you spend time trying to make plating products to get a higher margin and joining the rest of the piranha in the tank fighting over what few clients are left because the Cash-for-gold chaps are long since gone.
I'm not an apologist for the refining industry, but your attitude is one I have found prevalent amongst people who want the work done for free or want only to see the highest number, not the best and most honest service. I personally would pay extra for a good relationship and consistency; price is secondary in my consideration because peace of mind I value higher.
I agree with aflac, it's not a bad deal if the assay is spot on. Frankly, I'd rather pay 2X the fees that your friend is quoted and do business with people I trust who have their margins, their goals, and it's all understood and things are consistent and assays agree to what we agree they should, always. The harder you squeeze the refiner, the closer you push him to mischief and reality blurs into fantasy and outright BS.
The real winners are the banks that lend the money.
You can try Midstates Refining in Illinois. Jack Brown manages that operation, and is a member here. He is a gentlemen and very easy to work with, in my experience.
My $0.25.
Lou
