GOLD BUYER WANTING TO PURCHASE / SELL 5,000 METRIC TONNES
On many occasions over the years throughout my travels around the world or in my office, I have been subjected to particular opportunities which to the unknowledgeable, undisciplined, or untrained may have seemed very lucrative. The amounts of money mentioned in these types of deals are so high that it fills the mind and heart with what I have termed to be the ‘treasure hunter’ mentality or syndrome. The mind and heart is so clouded with the potential once-in-a-lifetime profits to be made that all common sense goes by the wayside.
All factual analysis of such deals is ignored often, bringing much personal damage to one’s own reputation or worse, to one’s own personal finances. The heart begins to beat at a faster pace, the mind races through who do I know/who can help me pull this off/what connections do I have, etc, etc. I have seen many men throw away years of their lives on such ventures and also destroy their own credibility. Yet if one sits back and begins to take a careful look at the facts, soon the self-deception is brought back to reality.
HOW BIG IS A TONNE OF GOLD?
We have all seen those movies with rooms full of Gold. Well, this is far from reality. In fact, there is very little Gold around. Below is a metric ton of Gold. It is only 37.27 cubic centimeters, just slightly larger than a milk crate!
In the nation of Australia, the maximum weight allowed to be placed on a flat deck semi-trailer prime mover heavy vehicle is approximately 22.5 tons of net weight. The average semi-trailer without its prime mover hitched to it is approximately 12.8 meters in length and 2.4 meters wide.
As you can see and envision from the above diagram, there’s a fair amount of empty deck space on the flat deck interstate prime mover.
Actually, out on the highway a fully laden semi would probably pass most unsuspecting motorists completely unaware that approximately 20 to 22 tons of Gold was even going by them! The truck would almost look as if it was empty!
HOW MUCH GOLD IS THERE?
According to the World Gold Council FAQs, all the Gold ever mined in human history equates to between 165,000 tons to 175,000 tons. Over 60% of this Gold has been mined since 1950 from the world’s top ten Gold mining companies. One metric ton equals 32,150.746 Troy ounces, which would give us approximately 5.3 Billion ounces of Gold in troy ounce terms.
GOLD / MEN / LABOR HISTORICAL RATIO
Gold is in relation to men’s labor; it takes real labor to bring gold above the ground. In ancient Egypt 5,000 years ago, gold production was in proportional ratio per ounce to the global population. One ounce of Gold would purchase you one man’s life for his entire life; hence, one ounce would purchase a slave for life securing the purchaser the productive output (labor) of a man’s life for life.
Just above I mentioned there is approximately 5.3 billion ounces of Gold above the ground from all of history combined up until today. The current world population is approximately 7 billion people, which gives us today a 0.75 ratio of people to Gold. This ratio of one ounce per man throughout the last 5,000 years has stayed fairly well within a close range to global populations. So, let’s say the ratio is one to one, which means for every 10 ounces of Gold you purchase today, you are effectively canceling nine people out of the market that cannot enter.
Gold has always been the money of kings and rulers. When we compare Gold’s link to wealth and wealth’s link to a man’s labor, we also need to consider that kings, rulers, and governments have always managed how effectively the people of a nation can have control over the wealth of a nation. You see, Gold extracted from the earth’s crust above the ground throughout all of human history has always been directly linked to global populations. Therefore, Gold above the ground can be mathematically calculated against global populations since it takes men’s labor to bring Gold to the surface of the earth. – Thinking points here.
There are many self-proclaimed intermediaries and mandates claiming to represent buyers or sellers willing to conduct Gold bullion business at a discount. We recommend exercising the greatest caution when dealing with these claims. With almost two decades in the bullion industry, our experience has shown that none of these deals has ever come to fruition and if they do are always fraudulent. The pattern always coming from such claimants includes:
- Huge amounts of money to be made from commissions.
- Those pushing these deals are always seducing people who have no experience in this industry.
SCAMS AND FRAUDS
Gold attracts its fair share of fraudulent activity. Some of the most common to be aware of are:
- Advance Fee Fraud – Various emails circulate on the Internet for buyers or sellers of up to 10,000 metric tonnes of Gold. This is more Gold than the US Federal Reserve owns. Often naive middlemen are drafted in as hopeful brokers. They usually mention mythical terms like ‘Swiss Procedure’ or ‘FCO’ (Full Corporate Offer). The endgame of these scams is unknown, but they probably just attempt to extract a small ‘validation’ sum out of the innocent buyer/seller in their hope of getting the big deal.
- High-Yield Investment Programs – HYIPs are usually just pyramid schemes dressed up with no real value underneath. Using Gold in their prospectus makes them seem more solid and trustworthy.
- Gold Dust Sellers – This scam persuades an investor there is real Gold by offering a trial quantity, then eventually delivering brass filings or similar.
- Counterfeit Gold bars and coins.
- Shares in fraudulent mining companies with no Gold reserves or any potential of finding Gold.
Anyone claiming to represent a bank, mint, government or some kind of fund but is searching in the non-professional bullion market is highly unlikely. No bank, government, refinery or mint requires the assistance of non-professionals, nor would they search for Gold this way. Each one of these entities has direct access to market makers on the London Bullion Clearing and does not need to enlist the services of non-professionals.
Additionally, when dealing with dust, dore or concentrate, it is common sense that any legitimate source of this type of Gold such as a mining company would already have contracts in place with reputable refineries and smelters. With such relationships they can command market prices and do not need to sell at a discount. The only exception would be mining operations with a questionable nature and reputation. These “sources” can be fraught with risk in transportation to smelters and refineries as well as questionable purity and quality.
Any private seller who claims to have Gold of substantial quantity can exist (although very rare), but again, does not need to sell at a discount. They would simply have the Gold refined and certified at an LBMA refinery for a fee, after which they could sell it at market price. Anyone willing to sell at a discount would be a complete fool or a criminal who does to want to verify the source.
TRANSACTIONS OVER 15 TONNES
According to the LBMA global Gold trading statistics, total transactions globally 2020 amounted to approximately 7,000 to 10,000 tons. Even though this has substantially increased over the last few years, I am sure you will understand my points after reading on. This was spread over approximately 50,000 transactions. There are a large number of non-professionals claiming to represent buyers and / or sellers of 500MT, 1,000MT, 5,000MT and even 15,000MT.
Many amateurs have not bothered to study the supply / demand statistics for Gold and Silver bullion markets and do not realize that 2,000 metric tons of Gold is half the annual production of all Gold mines put together worldwide! While the motivation to believe such numbers is understandable (especially if combined with preposterous rates – for example, 8% discounts and 3% commissions), the facts do not support it. The reality is that such claims, in our experience, are again, always fraudulent or suspicious.
BULLION, DUST, DORE, SLURRY CONCENTRATE, JEWELRY AND SCRAP
Many who find themselves new to the bullion industry often confuse these terms for the same thing. Bullion refers to Gold that has been refined to a specific purity of 999.5 parts per thousand or better. Bullion that is refined to this degree or higher by an LBMA-accredited refinery is certified as money in the LBMA system. This is why the refiner’s stamp is important on any articles of metal to clarify authenticity.
The LBMA is the London Bullion Market Association that represents the wholesale Gold and Silver bullion market in London. London is the focus of the international OTC (over the counter) market with a client base that includes the majority of central banks, producers, refiners, security storage, fabricators, and traders globally.
The LBMA Good Delivery List is widely recognized as representing the de facto standard in Gold and Silver bar quality based upon the stringent criteria for assaying standards and bar quality that an applicant must satisfy in order to be listed. For bullion to be recognized by the global financial system as money, it must be certified by an LBMA accredited firm on the Good Delivery List.
There is a great deal of confusion among the amateur segment of “bullion intermediaries” in terms of not understanding that Gold is actually money. Once Gold has been refined and certified with the stamp hallmark of an LBMA Good Delivery refinery, this Gold is now recognized as money in the global financial system inside the chain of integrity. As money, LBMA certified and hallmarked Gold is never discounted; you cannot get a discount on money. – Take Note!
Dust, Dore, Slurry Concentrate, Jewelry and Scrap, on the other hand, is not considered money. It is unrefined and/or does not have the refiner’s stamp on it; therefore, it does not meet the purity and security requirements to be classified as bullion.
AN AGE-OLD PROBLEM
During the Spanish occupation of many South and Central American countries during the 15th-17th centuries, much Gold was taken back to Spain via Fort Saint Lorenzo in Panama. Panama held the Gold awaiting shipment back to Spain under heavy artillery guard.
When Spanish galleons would arrive at Fort Saint Lorenzo, they would be quickly loaded and sent on their way bound for Spain’s refinery. On their journeys back to Spain, the galleons would be attacked by pirates, normally British. However, after the pirates acquired the Gold, they had difficulty selling it even on the black market, because its authenticity of purity would come into question.
Everyone needs to realize that Gold must go through the refiner’s fire before becoming pure enough to be money and a store of wealth. Without Spain’s refinery stamp on the Gold guaranteeing authenticity of purity, people simply didn’t trust it. This has been an age-old problem going as far back as ancient Egypt itself.
So be careful what type of Gold pieces you purchase!
DON’T CALL US; WE WILL CALL YOU
Back to the opening statement: “GOLD BUYER WANTING TO PURCHASE / SELL 5,000 METRIC TONNES”.
Consider all the information above pertaining to how much Gold there really is above the earth’s crust, how much Gold is traded daily, the real dimensions of a tonne of Gold, what it takes to actually mine Gold in relation to a man’s labor, and also defining its authenticity. Once reviewing the facts and getting control of one’s emotions, I trust you will do what I do when someone contacts me regarding such types of lucrative transactions. Simply hang up the phone or delete the email, and don’t waste your time with them!
It should be clear for all as to why Gold is called a “precious and rare metal.”
I hope these facts and realities have been helpful to everyone. We all need to focus our time on real transactions that can ‘close’ and financially reward everyone involved.
Until next time
~ SC FK Consultant