This is a question that customers often ask me when they come to sell the metal. They wonder if the gold I buy is melted down into bars, or if is it resold as is.
In short, they are curious to know how the entire supply chain works.
In this article, I will explain the whole process, and I will be as non-technical as possible. It is not important to understand all the phases specifically, it is important, however, that you understand how the chain works in general.
In my specific case, having a jewelry shop that sells used gold, I separate the one destined for resale (the most beautiful, branded one, with precious stones), from the one destined for smelting.
The first, after a regeneration process, is sent to the jewelry to be resold; the second is destined for the metal bench.
Note: Most gold buyers do NOT have a jewelry store and send everything directly to the metal counter
The Gold Chain
As we said, the gold purchased from the gold buyer is resold to the metal banks.
Metal banks are foundries, which purchase metal wholesale from shopkeepers.
In other words, it is the opposite of what happens at the market, for example with fruit:
The greengrocer buys fruit at the wholesale market and resells it to customers.
In our case, however, it is the opposite: the gold buyer buys the metal from customers and sells it to the wholesaler.
Once the gold is brought to the metal counter, the latter melts it into a single ingot.
Once melted, with a drill, it makes a small hole (actually it makes two, one above and one below) to obtain a small piece, called a “chip”
This shaving is used for the TEST, i.e. a technique used to determine and analyze the value and fineness of the gold (the carat, expressed in thousandths).
This analysis can be done by “cupellation” or “spectrometer”, but here we enter too technical issues that it is not necessary to know.
Why Does All This Have To Be Done?
Melting and analysis of the chip are essential to establish how much gold you have brought and its value, fundamental things to define how much we need to take from the metal bank for that gold.
Consider that a gold buy brings 1000g of gold to the metal counter. Among these objects, most are in 750 (18kt) gold, some are in 585 (14kt) gold, and maybe there is a fake bracelet.
Without the smelting and the shaving assay, it would be a very long process to determine the actual value of that gold (do you know how many necklaces it takes to make 1000gr?).
With the transformation into an ingot, on the other hand, it is as if you were bringing him a unique jewel.
In our example, consider that the chip rate gives us a result of 735, which means that our 1000g ingot has 735g of pure gold.
Once we determine how much pure gold we’ve brought, we get paid based on the metal’s price.
As for the role of gold buyers in the supply chain, that’s all.
The metal bank will then melt all the gold received and refine it, i.e. transform it into pure gold.
Once transformed, the gold can take different paths: a part is destined for the creation of investment gold (ingots and coins), and another part is sold to large goldsmith companies, such as those in Arezzo or Valencia for example, where they will be processed, transformed into jewels and put back on the market.