Buying and Selling Gold

By

Jim Sheridan, Sr. VP Corporate Relations? ?????????????? C-Gold/Great American Bullion

June 2024

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If you are on the internet and networking with business professionals, there is a good chance that you have been approached by a prospective buyer or seller of gold. I must see at least 3 to 4 inquiries a month. Everyone knows that gold is expensive, and the amount of gold being offered is large. Wow you think this could be a real opportunity to make a commission.? Who has not had that thought??

If you have never been in a gold buy or sale transaction you have no idea of what to expect regarding the process of a gold transaction.? You will be stunned at the possibility of how much commission you could make if you can find a buyer or a seller for the client.? You are motivated.? You drop whatever you are doing and begin to search for a buyer. You contact everyone you know hoping to hit the jackpot.

An inquiry to buy or sell gold can come in different forms.? It could come as an email; the email may have an attached formal document called a soft corporate offer (SCO) or even a full corporate offer (FCO).? An SCO or FCO will define the terms of the purchase such as the amount of gold offered for sale, the purity, the delivery process, and how to initiate the transaction. The document will be very formal, presenting the necessary information about the proposed purchase.? The document may or may not be signed with an official corporate stamp.? It may or may not be on the letterhead of the buyer’s company.? Often the name of the buyer will not be present on the document. The buyer is setting the terms for his willingness to purchase your gold.? The document should be dated.? Many of these inquiries are not real.? No signature, no letterhead, no name of seller and no current date equals broker in the middle hiding who the offer is from.? Big red flag and mostly a waste of your time to pursue.

Inquiries come from buyers as well.? These inquiries are less formal.? You will be contacted by a colleague or out of the blue asking if you have anyone selling gold.? Again, the inquiry could be an email or phone call.? The request may or may not be accompanied by a Letter of Interest (LOI).? The LOI will include pertinent information about the gold to be purchased.? Sometimes they will state the price that is willing to be paid, sometime a discount % will be requested, commissions to intermediaries, delivery options, and payment procedures.? The buyer may also lay out the procedures for the transaction that are required [CIF or FOB].? Usually, the buyer will want the seller to ship CIF.? Shipping CIF requires the seller to assume the costs and risks associated with transport until delivery, which is when the buyer assumes responsibility. The seller arranges and pays for the freight charges, including any insurance costs during transportation. There can be additional documentation requirements in a gold transaction such as the sending of a Client Information Sheet (CIS) with a copy of the passport and a document showing proof of funds (POF).? The buyer is required to show that they have the ability to pay for the purchase of the gold. ?

Since bullion gold that is .9999 is never shipped until it is paid for it is unrealistic for the buyer to demand that the gold be paid for when it is delivered.? No gold seller is going to send their product to a buyer without getting paid up front. ?

Time is valuable thus you need to ask yourself a series of questions before you launch into beast mode to find a buyer or a seller for a gold offer.

·???????? Do I trust the source of the request?

·???????? How do you know if this is a real offer?

·???????? Are real gold transactions executed in the manner proposed?

·???????? Who sets the terms for a gold transaction?

You should be asking yourself a lot of questions about any request for a gold transaction.? First, do you know the person who sent you the information?? If you know and trust the sender, then you can assume that they believe it is a legitimate offer.? Trusting the sender does not guarantee that the offer or inquiry is real. All of us have been duped into thinking that the offer was real. I know I have been as was the person who sent me the offer.?

What are the red flags found in gold transaction offers?

The date.?

What is the date on the SCO of FCO?? If the date is old, you will want to verify that the offer is still valid.? Go to the source to verify it.? Note: Often the identity of the issuer of the SCO has been removed from the document.? That is done to stop intermediaries from circumventing other intermediaries. You need to verify the current date status of the document.? Documents are passed over the internet all the time that are years out of date. Total waste of your time.? Frequently you will find that the individual that sent the offer has no clue who the real buyer is.? Maybe the person who sent the offer to him doesn’t know either.? You are dealing with a broker chain, and it is unlikely that you will ever close that deal.? If someone says they are a mandate ask them to send you their authorization letter to represent the seller.? You will most likely never hear from them again.?

Check for the reasonableness of the request.

Is the offer for a large amount of gold – tons?

For example, 20 tons or more are being offered for sale or the buyer is asking to buy that amount.? If the amount is large, then you need to verify that the transaction is real.? In 2023 all “Central Banks” in the world purchased only 1023 tons gold.? If your buyer or seller is offering a large amount of gold like 20 tons, that is almost 2% of what the global banking central banks purchased in 2023.? Does that sound reasonable to you?? Again, you need to verify with the buyer or the seller and the gold amount.

The option for “rolls & extensions.”

Rolls and extensions mean that after the first transaction there could be additional transactions with the same terms.? If the offer is for 100 tons and they are offering to buy or sell 100s of tons of gold with rolls and extensions, my conclusion is that the offer is not real.? Think about it, every 100 tons is 10% of the global central bank purchasing for a year.? It could be real but over a ten year span I have never seen a deal of this size close.?

The transaction terms are set by the Seller.

Buyers will try to set the terms for the transaction.? That is not the way a gold transaction works.? The seller sets the terms.? You should advise your gold transaction contact immediately that the buyer does not determine the terms of the transaction.? This is a take it or leave it situation.? Buyers believe that because they have funds that they can set the terms of the purchase.? That is not the case.? That is not to say that the buyer and seller cannot negotiate a different arrangement but in most cases the seller will dictate the terms of the sale.? If a buyer insists that his terms are non-negotiable – drop him right now – it is a non-starter.

Commissions for gold transactions.

A large commission (something over 3% to 5%) included in the documents is a red flag.? Sellers pay the commissions, but they do not pay large commissions.? Why?? Because gold is sold at the current market prices.? There are no discounts for high purity gold.? The price is market price plus a small fee? (usually under 3%).? The intermediaries would get a percentage of the small fee – they do not get a commission percentage based on the total value of the sale.? Discounts are offered on dory gold which is .92% purity. ?There are no discounts on gold with a purity level of .999.

A key issue in a transaction will be “who moves first.”

This is another area where you must think rationally.? Many requests you receive will require that the gold seller send the gold to a refinery for ??????????? assay and remelt before the seller is paid by the buyer.? Would you send a kilo of gold to anyone without being paid for it up front?? Once the gold leaves the seller’s hands he has lost all control of his assets.? Gold can be melted down and once melted is not indistinguishable from all other gold. The seller has no way of identifying his gold from any other gold.? This is not going to happen in a real gold deal.? There are companies who deal regularly with each other who can and do operate with less transaction restrictions, but they have a long track record of working together.

?????????? On top of that, the delay in being paid creates a new problem. The price of gold changes constantly.? If the price of gold drops between the time the ???? purchase is made and the assay the buyer is not going to want to pay the original price but the new lower price.? The seller can lose money on the ????????????? transaction. Do you think that gold sellers are going to risk losing money?

Of course not!? So, when a buyer demands that you send him your gold before he pays you, rest assured, he is not going to buy gold from a “real” gold seller.? You are being jerked around by someone who is not fully informed on gold transactions.

To be perfectly clear, if the seller is selling .9999 purity gold and the seller is a USA company, then the buyer will always pay upfront before the gold is shipped.? For special clients that are trusted by the seller, some options to the payment process might be negotiated on a case-by-case basis.

If the buyer is asking for .9999 hallmarked gold to be shipped to a refinery before he pays – drop the transaction. If the buyer is buying dory gold the usual procedure is to ship the gold to a refinery where it will be assayed and refined. Once the gold is assayed the payment for the gold will be made by the buyer to the seller.

Hallmarks

Gold hallmarks are an essential part of the market, ensuring buyers have an independent, accurate indicator of how much gold can be found in a bar of gold. Hallmarks certify the gold content of the item that is hallmarked. There is a date associated with the hallmark that indicates when the hallmark was applied to the item. The date of the hallmark is irrelevant but very important when dealing with high grade bold bullion. Gold is gold. Gold does not change in composition due to age.

Often you will see a buyer or seller require that the gold they are buying has a hallmark dated less than 5-years ago.? Some buyers will say that the gold must be re-smelted and re-hallmarked if the date is greater than five years.? Total nonsense.? There might be a need to verify if the hallmark is real. If there is a need to verify a hallmark, there are a multitude of sources on the internet to determine the validity of a hallmark.?

The points above are meant to save you time in weeding out real buyers and sellers from the junk mail you receive over the internet concerning gold transactions. Always be wary of offers that rationally do not make sense.? I think you would agree that offering to sell more gold than all the central banks of the world buy does not make sense. Conversely, offering to buy more gold than all the central banks of the world buy in a year does not make sense.? It could happen, but do you really think it is going to be acquired through a chain of intermediaries on the internet? The gold selling and buying community is small and they know each other; they deal directly with each other.

That does leave a large number of global gold buyers who do not buy gold by the ton but are looking to acquire gold.? These buyers are institutions like hedge funds, asset managers, private/home offices, retirement plans, 401K plans, IRAs, Roth IRAs, private investors, blockchain crypto currencies/coin/tokens backed by gold, jewelry manufacturers, electronics manufacturing, and numismatic collectors who all buy gold.

With all of the uncertainty related to global economic competition and the challenge to the US dollar by BRICS countries (Brazil, Russia, India, China, South America, The UAE, Saudi Arabia, Iran), many are replacing part of the investments with gold.? India just repatriated 200 tons of their gold from banks in England back to India for safety because of the tensions around the world.

Selling and buying gold is big business.? You cannot turn on a TV or look at any news outlet on the internet without being blinded by companies trying to convince you to buy gold.? Movie stars and celebrities are employed to convince you to buy gold.? Have you ever tried to hire a celebrity as a spokesperson?? Well, I can tell you that they think highly of their time, and they don’t come cheap.? That cost has to be covered by the sale of the gold – yes the commission is in the gold price you pay.?

However, there are options for buying gold without high mark-ups.? I spent considerable time researching the various options and the one I found that I am using is:? GreatAmericanBullion.? You can buy a gram or in the kilos and they are price competitive and beat most prices that I have seen.? They are located in the USA, BBB A+ rated, the CEO is a compliance officer, and you can do everything on-line.? No paperwork, no proof of ability to pay – no fuss no muss and they deliver it wherever you need it delivered.? If you have a special need you can talk to the man in charge, and he will let you know if it can be done.? Caution – they do not deal in dore gold!? They have coins and bullions in silver, gold, platinum, palladium, gold for IRA account, Roths, and a gold saving plan that is the only one I have ever seen.? Worth a peak even if you are not in the market a friend or family member might want to take a look.

Offers to buy and sell gold on the internet often require the buyer and seller to jump through hoops just to prove they are real.? I think the intermediaries might be part of the problem.? So, to be blunt review the following:

Question:???????? Does the buyer need to send a LOI to initiate a purchase of gold?

Answer:??????????? No.

Question:???????? Is the buyer required to send his personal information in a CIS to ?????????????????????????the?Seller to buy gold?

Answer:??????????? No.

Question:???????? Is the buyer required to show proof of funds to buy gold?

Answer:??????????? No.

What buyer or buyer representative has not been told that the buyer must submit his LOI, CIS and Proof of Funds before the seller will move forward in a gold sale transaction.?? Everyone has been told those documents are required.

While some sellers may require the buyer to jump through hoops to enter into a gold purchase transaction, savvy real gold sellers and traders have abandoned those requirements.? Now buyers can go online, open an account, select the precious metal product wanted, place an order, wire the money and the product is delivered to their designated destination.? It is that simple.? See for yourself, click the link: GreatAmericanBullion

??????????? Seasoned buyers of gold know how transactions are structured and have very few questions regarding the process.? Those buyers who are less seasoned may not be sure of how the terms are set or how a gold sale transaction takes place.?? Intermediaries representing potential buyers of gold often operate from information gathered from the internet.? As we all have found out, information on the internet can be dramatically incorrect.

Here are the facts about gold buying from a reputable gold seller:

1.??? Gold purity of .9999 is never discounted.

2.??? Dore gold will be offered at a discount on occasion.

3.??? The buyer sets the criteria for the product he wishes to purchase.

a.??? Hallmarked or not

b.??? Age of the Hallmark if selected

c.??? Size of the product

d.??? Amount

e.??? Purity

f.?????Taking possession of the product

4.??? The price of gold is set by the market, and the market is constantly changing.

5.??? A small fee above the price of the gold is charged.

6.??? The gold is paid in a bank-to-bank transaction.

If you want to visualize how a transaction like the above takes place just click the link: GreatAmericanBullion.com

If you wish to sell your gold bullion or coins a similar simple process is available on the website of the link provided above.? Just open an account and click on “sell my metals” in the navigation panel.? If you have a large amount of bullion or coins a talk with the CEO would be advisable.

??????????? I hope this has been helpful to those out there trying to match up buyers and sellers of gold. Not easy but it can be done.? Don’t waste a lot of time on those offers that are ridiculous on their face now that you know the true facts about how much gold is being bought and sold on an annual basis.

Contact:? Jim Sheridan [email protected]