How do gold refineries make money? When they buy our Gold what do they do with it...

Discussion in 'Off topic' started by itsme, May 16, 2008.

  1. itsme Guest

    itsme
    ...to make a profit? I need to know how do refineries make their money. When refineries buy people scrap gold and such. They melt it but then what do they do with it. how do they make a profit? Who do they resell to? Who buys from them?
  2. Russel Raphael Not Active

    Russel Raphael
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    When you sell gold, the refinery charges you impurity charges i.e. approx 8.4% in case of 22 Kt and more in case of lower Kt, apart from this they also reduce the designing charges which may vary from 15-25%. This gold is then smeltered and purified using Sulphuric Acid. The same is then re-processed, re-designed and sold at prevailing market rates.
  3. David W Not Active

    David W
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    Refineries are quite lucrative businesses. It's all really about services or processes.

    When you sell them your scrap gold they assay it, to find out exactly what percentages of what metals you provided them. They may charge you for that "service."
    So there's profit #1.
    Then they use acids to dissolve some metals and not others to purify the valuable metals. Suppose you sold them some 14K gold scrap. You actually sold them a metal alloy of 58% gold, 20-25% silver, and 12-7% copper by weight. Proportions vary by different alloys, but the Karat of gold is always a fraction of 24. 24K is 99.9% pure and 12K is 50% pure.
    Anyway, they would pay for the gold, at less than 58% what gold traded for on the day they receive your shipment because the gold you sent was scrap, therefore of a lesser value because it needs to be processed (by them) to be of pure value again.
    That's profit #2 and #3.
    They pay a devalued rate for scrap, and in case you missed it, both silver and copper have a value, and are traded as commodities, but the refinery probably won't pay you for the other metals in the alloy. Though it may not be as big a number as the gold, they deal in volume and the little numbers add up.

    By the very process of removing the impurities they increase the value of the metal, and that is the main way they make their profit. Used metal has less value as pure, unless it has historical or sentimental value.
    If a refinery has purified an alloy into it's purest state, the metal is in a more rare state. The laws of supply and demand follow. Since refineries are the main source of pure metal, they stand to make the first, and most, profit from the refining process.
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