By Kim Michalik, President Pease & Curren refiners
Gold is more than something that glistens. Proper refining protocol can often lead to an increase in your bottom line.
Best practices for retail jewelers, particularly those who have bench jewelers on site, are always important. Over the years, we have encountered many customers losing efficiency and not maximizing their profits with regards to their precious metals collection and recovery.
No matter how large or small your operation is, we all agree everyone can use a little more added to their bottom line. For the highest return on precious metals many of our customers have found that there are best practices that should be followed for a consistently profitable refining program.
Here are a few areas to bring your attention:
- Best practices for scrap collection
- Best time to send your scrap
- Best shipping practices
- Understanding your return
Segregate material by type. Keep free of trash and no value. Eliminating steel, rusty nails and “no value” trash mixed in with your precious metals can help you to more accurately predict your return. In addition, you will have better accountability and be able to potentially identify in house or refinery issues.
When collecting “sweeps” don’t forget vacuum bags, temporary rugs under benches, rags and wipes. There are trace amounts of precious metals on these items and over time, this can really add up. Buffing machines can hold a good amount of precious metals as well. Wiping the machine down periodically and sending the wipe in with your sweeps may add to your return. For larger retail jewelers, this could mean a substantial increase in your return. We once had a jeweler that found $65k in the rug of his facility. The check was certainly nice; however this is not necessarily a good thing. The customer promptly reviewed the company standard operating procedures for jewelry repair and maintenance.
Best not to put small amounts of one metal with large amounts of another. This can lower yield and may result in a more complicated recovery and possibly a lower payout.
Keep records of all material sent. This may seem tedious, but this is your money. Compare the actual results to your history. It is important to note, there is always variation, but if there is a wide gap in your records you may want to speak with your refiner.
When to Send Scrap
A few things must be determined in order to know when the best time is for your firm to send scrap.
How much scrap is generated by your organization? If your firm generates a lot of scrap, it is important not to wait until your collection barrels are inconvenient to change out. If you see they are getting full, simply call your refiner for another container.
How important is this as a financial line item to the organization? In other words, if you have less than 20 ounces and can afford to wait to accumulate more, you may want to exercise this option. Accumulating scrap and playing the metal price game may be of interest to you and your business. Some refiners offer a “hold” option which allows them to hold your refined precious metals until the desired gold or precious metals price is achieved in the market. It is at that time the customer can call in and make the choice to spot sell their precious metal.
It is important not to just send because there is a “truck in the area”. Collectors and/or “cash buyers” are not working in your best interest. You run the risk of a lower estimate without performing a true fire assay. A full service refiner is looking for a repeat customer and is more apt to form a relationship built on trust with customers.
Best Shipping Practices
Shipping is an important part of the process. Containers that are not properly packaged can result in security breaches and loss of materials. For best practices the following is suggested:
- Evenly distribute the weight throughout your container
- Tape jars closed
- Double bag when packaging in bags
- Completely tape all seams
- Wrap in bubble wrap or other packaging to eliminate noise
- Use security seals on containers
- Avoid descriptions on containers that identify the type of material
- Do not use words like “jewelry” in the return address
Understanding Your Return
Over the years we have found that the perception of our industry is that we are selling something that is intangible and invisible – a refining service. It seems that their idea of what a refiner does is just to melt metal.
- Improve inventories
- Improve costing
- Improve efficiency
- Improve communications
- Improve processes
- Improve quality
To fully understand your return, key factors to measure are: the weight of the shipment, the type of scrap sent and the metals weight on which you are paid.
Factors to understand, but not weigh heavily into your decision should include: Metal prices, after process weights, assay and settlement terms/charges.
The charts below illustrate the differences in returns on 150 troy ounces (oz t) shipment.
|150 oz t
|150 oz t
|150 oz t
|100 oz t
|125 oz t
|125 oz t
|Settlement oz t
|44.1 oz t
|44.1 oz t
|42.0 oz t
Example #1 is based on the fire assay technique. There is a recognized difference between fire assay and X-ray assay.
|Settlement after accountabilities
|(44.1 oz t)
|Final payment to customer
This is a simple example of how differences in the method of refining can make a difference. It is important to evaluate the supplier’s financial stability through firms such as JBT or Dunn & Bradstreet. To minimize risk, due diligence is required. Insurance certificates and environmental compliance records should be available upon request. Both laboratory and operations processes are important to explore.
Kim Michalik is President of the New England Chapter of the Women’s Jewelry Association and President of Pease & Curren refiners. Kim has a BA in Chemistry and a MBA from Bryant University. She has been in the precious metals refining industry for over 15 years.
About Pease & Curren
With 100 years in the precious metals refining business, the Pease & Curren way is disciplined, honest, consistent, and respectable. P&C has superior programs including: Stone Removal, Appraisal Services, and a fire assay process that P&C says is 20 times more accurate than X-Ray refining. Contact Pease & Curren at 800-343-0906 or www.peaseandcurren.com.