The World’s Great Gold RefinersJames Cordelaine
It’s difficult to think of gold without also thinking of the word “pure.” Who among us doesn’t require the gold he owns to be pure? But how can we be sure it’s pure? Do we bite it, sniff it, hold it up to the light, pour a certain liquid over it and look for a change in color?
Don’t laugh. Smugglers have been known to alter gold chemically just to sneak it past customs officials. Just recently, a passenger on a plane from Abu Dhabi unsuccessfully attempted to pass rhodium-plated gold through airport screening machines.
As it turns out, there are authentic and sophisticated tests for purity at the refinery level, just as there are international standards for “good delivery,” a formal phrase in the precious metals industry which assures buyers and investors they’re getting the standard of purity they expect . Such standards originate with, and are monitored by, the London Bullion Market Association (LBMA).
LBMA is an international trade association that represents the London market for gold and silver bullion. It includes private sector investors, mining companies, producers, refiners, fabricators, and the majority of gold-holding central banks.
Additionally, refineries who qualify for LBMA good-delivery status must satisfy strict organizational criteria. Among other requirements, they have to have been in existence at least five years, have a recognized annual refined production of at least ten metric tons, and have a “tangible net worth” of at least fifteen million pounds sterling, an amount that’s subject to change.
Which international refineries, then, does LBMA admit into its exclusive fraternity? The biggest are Metalor Technologies, Heraeus, PAMP, Argor-Heraeus, Tanaka, Valcambi and Rand Refinery. Collectively these seven maintain a gargantuan refining capacity of five thousand metric tons per year.
Of these seven giants, four are Swiss. Through many years, Switzerland has managed to enjoy considerable prestige due to its special relationship with the shiny metal, although, as is often the case when great wealth is involved, the nation has experienced its share of controversy. In 1995, the World Jewish Congress (WJC) initiated a lawsuit against Switzerland for blocking Holocaust victims’ access to their gold. The WJC and the Swiss finally reached a settlement five years later.
Still, the Swiss like to think of themselves as the world’s gold experts and curators. In a video discussion on the probability of ten-thousand-dollar gold, analyst Jim Rickards and Swiss gold dealer Egon Von Greyerz touch upon how the yellow metal routinely leaves New York City. It stops along the way in Switzerland to get melted down and refined, and then ultimately gets shipped off to buyers in Asia in search of pure gold.
While the Swiss have every reason to be proud gold refiners, credit must be given to South Africa for having the refinery with the most massive historical output – fifty thousand metric tons of gold since its Rand Refinery opened in 1921. In case you’re wondering what the significance of that number is; it amounts to one third of all the gold ever mined. With the current worldwide concerns about currency valuations, low-to-negative interest rates, a wildly controversial U.S. election, and the Chinese yuan’s impending debut as an IMF-recognized reserve currency, you can bet the world’s central bankers have Rand and many other refiners on their speed dial.