Owner-CEO at Noble MetalWorks
It always seems to be the case when people discuss gold that their eyes glaze over and they take on that look that borders on day dreaming or maybe insanity. Gold is simultaneously the most famous and infamous commodity the world has ever known. People believe almost anything, and will lie about everything in regards to it. It has caused more happiness and at the same time more anguish and heart break than any other single commodity in the world.
And yet here we are, jockeying and attempting to conduct ourselves in this market.
After seeing numerous posts on this subject, and instead of posting on each one individually, I thought a bit of information on the subject might be useful, especially to those that are obviously and painfully new to this trade.
Specifically I will be talking about West African nations. While I will not be giving specific information on individuals or companies, because that knowledge has been hard won and is part of what I do for a living, I will be giving good solid information on how to conduct a transaction of this nature.
I will be exposing some common misconceptions about the gold market in West Africa as well as expressing mistakes to avoid and the proper way of conducting a gold trade deal. Please understand this is not all inclusive and is written as I sit here thinking about what to write as I take a break from my normal day to day responsibilities.
1. The major mining companies in West African have already sold their gold before it is ever wrestled from the ground. Unless you have made prior arrangements and have dealt with the mining company directly you will never be offered any of this gold. Consider that gold is in such high demand by industry alone, that a large part that is utilized in the manufacture of electronics comes from recycled sources. There are no large quantities of gold being offered by anyone in any African Nation, on the open market. It just simply does not exist.
2. If being offered “Gold Dust” ignore the trade deal. Gold is melted into Dore’ bars and is not moved around as dust. If you are being offered dust, and if it is real, it most likely came from the processing of e-waste that was sent to these countries illegally. But even at that, it should be melted into Gold Dore’ and not sold as the precipitated metallic “dust” people claim to be offering. Gold Dust = Scam.
3. A reputable person, company or other entity is not going to incur the cost of packaging, insuring and then sending you Gold in any form unless already having established a business relationship with you, your company the refinery you are wishing to have their gold sent to, etc. And even those types of situations are rare. There is certainly no way that anyone in their right mind would do so without also representing their material, so at the very least they must be able to legally enter your country to be able to represent their material.
4. Never ever offer proof of any banking instrument such as LCs, blocked funds, etc. A scam artist will use these as proof that they have funds, so that they can scam someone else out of a commodity. Or they will sell off the use of these banking instruments to other parties to use in this way. If you were dealing with a reputable mining company or refinery in one of these nations, this might be a viable way of conducting business but considering the people you will have access to, to purchase from, this will never be the case.
5. Since all the large mining companies, refineries and brokering firms have already sold their gold supplies before they even generate them, you will be dealing either with individual miners, small brokers who actually go out into the jungle or countryside and purchase directly from Artisanal Miners or other small entities. You never want to conduct the transaction directly with these people without first having the material assayed. This is extremely important. If you do, it is more than likely that you will be either scammed, or soon robbed after the transaction has been conducted..
6. Never make any kind of prepayment of any sort. Not for shipping costs, not as proof you are serious, not to purchase or secure anything, ever. If someone asks you to do this, it is a scam, period. This is not the way to conduct any trade deal. This is where the confusion starts, a scam artist will advertise that they will send gold to a refinery or your choice without anything more than you paying for the shipping and insurance. You are directed to make payment by western union, or wire transfer or some other method, or even to a company they direct you to. The company doesn’t exist the phone numbers are almost always throwaway cellular numbers etc.
7. This leaves only the obvious option, you must travel to the country of origin to purchase the gold personally from whoever it is selling it. If you are not willing to do this, forget your dreams of buying gold from West Africa.
8. You are not going to purchase gold for 10% below LME (London Metals Exchange) or what is often referred to as London Fixed Pricing. Not unless you are travelling into the jungle and buying small amounts, often under a gram, from individual miners, but this is not feasible so for the sake of this document, will never happen. So if someone is offering deep discounts they are trying to scam you. Even if you are purchasing what might be referred to as “Blood Gold” it is simply not going to happen.
9. In each country you might find gold to purchase, there exists at least one government entity, or an entity which is licensed by the government of that country to properly conduct gold transactions. If you contact your embassy in the country you are attempting to do business with they most likely will have someone, that works for your countries embassy, who helps facilitate this type of business and will know who it is you need to contact, or the methods required in order to conduct a trade deal of this nature. These resources are usually at no cost and should be solicited if you truly desire to conduct a real trade deal or gold transaction.
10. Assay documentation that is generated prior to the transaction is almost always fake. For the most part, assays are conducted just prior to the transaction, and done so when both parties can represent the assay, meaning that you should be there as the metal is being assayed, as well as the seller. If this is not the case then you are setting yourself up to be scammed. Assays should be conducted by a reputable refinery that is licensed by the country you are doing business in, are insurable and known and possibly suggested by your trade facilitator of your embassy in that country. Each country has different laws and regulations and unique requirements. You should make sure you comply with all these in order to allow your trade deal to be conducted legally and efficiently.
11. Do not allow the seller to dictate or suggest a refinery of their own choosing to assay metals. Get a list of acceptable and reputable assayers and/or refiners/smelters from your embassy and the government agency that governs these types of trade deals in the country you are conducting business in. For example, in Ghana, there is one company you should be dealing with licensed by the Ghana Government. Unless you have a direct exporters license, you should only be dealing with this company and no other entity. All your shipping papers, customs papers and permits, etc. will be issued by this entity.
12. Just because a company, entity or individual offers what looks like legal documents, does not mean they are. They should be checked/cross checked with the government entities that are licensed to issue such documents. I would strong suggest not conducting any trade deal with anyone who claims to have these documents for you prior to offering gold. These documents should be generated aft er the specifics of the trade deal have been agreed upon by both parties, and then only after a proper assay while being represented by buyer/seller at the time of assay.
This list is by no means “all inclusive”. I am sure I have missed many things that should have been included. When I have the time I will be expanding this document and providing a link on my company website. However we are a small boutique refinery and as such, I do much of the work myself so finding time for this type of thing is often difficult for me.
With that being said, please feel free to message me if you have any suggestions, corrections or questions pertaining to what I have written here.
Scott Brown
Noble MetalWorks
A Boutique Precious Metal Refinery
