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It’s the end of the financial year and as usual, many jewellers turn their mind to refining of manufacturing by-products and old stock.  That means that there are plenty of people out there looking to get your refining business.  I’ve seen a lot of advertisements out there from many providers.  Many of them are honest, some of them are not and some of them only tell you part of the story.  So before you hand over your refining – I thought it was timely to make sure that you’re armed with all of the facts.  There are lots of hidden charges in refining – and these charges only increase when the person you think is refining your metal is actually just an intermediary.

So, here are 9 questions that you need to ask your refiner before you hand over your refining.  Asking these questions is guaranteed to get you the best result – every time.

Question 1:  Someone is offering to do my refining free of charge with no assay and no refining fee.  How is this possible?  I suppose that the best answer to this question is to ask another question.  Would you offer to make a piece of jewellery for someone and not charge them for the gold that you used to make it?  The answer is no, unless you’re Santa Claus.  And even if you did decide to give the metal away for nothing, you’d probably compensate for that by increasing the price of the diamond or your labour component.  People don’t work for nothing – no matter how nice you think they are.  And as my granddad said to me, “The only free cheese is in the mouse trap!”

Question 2:  Does the “refiner” do its chemical separation in-house or is it just subcontracted out after melting?:  There are not actually that many true precious metal refiners in Australia who can guarantee to refine metal to a 9999 standard on a consistent basis.  Many clients that I meet confuse melting with refining.  When someone offers for you to witness the melting of your refining job, remember that no refining is taking place – you are simply witnessing your metal being melted into a bar.  The real refining process occurs AFTER melting.  It’s a long process that chemically separates the various metals within your job into pure gold and silver and sometimes platinum and palladium as well.  So make sure you ask to see your refiner’s refining plant so you can see for yourself whether they are really refining your metal or if they’re actually only melting it and then sending it to a third party.  If they’re not doing the refining process in house, all you’re doing is paying a middleman…

Question 3:  Does the “refiner” own its own analytical laboratory?:  Ask the person refining your metal if they own their own laboratory.  Ask if they own their own XRF, AAS, ICP, Titration and Fire Assay equipment.  Not many people do and the reason for this is that they are not only hugely expensive but they also require a team of tertiary qualified experts to run them.  Also ask if they are externally certified, eg, NATA, ISO, ILAC, IEC, SA or LBMA.  If they don’t have the equipment and they’re not externally certified, you don’t have an independent reality check on your assays which means you don’t have an independent party giving you the peace of mind that what the refiner is telling you is the precious metal content of your scrap is actually what is there.

Question 4:  What is the assay fee?:  The assay is the process whereby a refiner qualitatively assesses or quantitatively measures the amount of precious metal in your refining job.  Our facilities test to parts per billion!  Make sure your refiner tells you how much they charge for performing this test for you.  Running the machines that do the tests costs money…

Question 5:  What is the refining fee per gram of incoming weight?:  Ask your refiner what they charge per gram of incoming weight to refine your metal.  If someone is offering to do this for free, you should remember that when something sounds too good to be true, it usually is…

Question 6:  What is the minimum assaying and refining charge?:  Refiners usually have a minimum refining and assay charge.  So if your job is small, sometimes the charges will exceed the value of the fine metal output of your refining.  Make sure you know what the minimum charges are before you go ahead

Question 7:  What is the retention percentage?:  This is a question that many “refiners” conveniently forget to tell you and with Question 8 below, this question is one of the most important questions that you need to ask because it has the most potential to impact your return!  A retention is a percentage of the fine metal output of a refining that the refiner “retains” – this covers losses during the process.  ALL legitimate international refineries charge a retention.  If you’re not being told what the retention is, then the person refining your metal is just taking the retention without your permission.  Many “refiners” don’t tell you what their retention is because they’re just a middleman – ie, they are sending your job out to a real refiner, being charged a retention themselves, and then adding an extra retention on top before it gets back to you.

Question 8:  What is the buy-back price of the metal out-turned and does it include or exclude GST?:  Most people sell the metal output of their refining to the refiner after the refining process is complete.  But there are 2 things that you need to know BEFORE you sell.  First – what is the price at which the refiner is buying back?  The buy back price is always a discount to the prevailing spot market price.  Also ask if you are being paid GST on the out-turn.  You should be!  So for example, if the fine gold content of your refining out-turn was 100 grams and you were being charged a 5% retention, 95 grams of fine gold would be the amount out-turned to you.  If the spot price of gold on that day was $50 per gram and the buy-back price was 5% below the spot price, you would be paid $47.50 per gram for the metal  – but here’s the kicker, you should also be paid GST on the amount (ie, an extra $4.75 per gram).  I’ve heard many people tell me that they’ve been paid the spot price on the out-turn of their refining but in every case where I have been told this the reality is that the price paid INCLUDES GST, which means that they’re actually being paid 10% less than they should have been.  Take this for an example.  Let’s say the spot price of gold is $50 per gram.  Someone offers to pay you $50 for your fine gold granules.  Unless they state otherwise, that $50 INCLUDES GST – i.e, $45.45 payable to you and $4.55 that belongs to the ATO.

Question 9:  I am being offered cash for my refining in an envelope sent to me in the mail.  Should I be worried?  Like the answer to Question 1, you really have to ask yourself – does this sound above board to you?  Reputable refiners will ask you to provide either an invoice or a statement by supplier where you state that the refining material is a personal not a business asset.  They won’t send you cash in the mail – period.

So the next time you’ve got a refining job, ask your refining service provider to give you answers to each of the above questions.  If you get these answers, you’ll have more in your pocket at the end of the day.  In refining, like most things in life – the following adage holds true – you get what you pay for.

Written by
Andrew Cochineas
Chief Executive Officer