Precious metals are a fairly large but rare category but the 5 key metals in this category are Gold, Silver, Platinum, Palladium and Copper. While the others including tungsten have specialised uses the world often speculates, prospects, trades and always needs these.
Our tryst with it has been recent especially as India is the world's largest consumer for at least 2 of the above with 2 others not trailing too far behind. We were mandated by a leading refinery to identify gold mines which could potentially be sources for long term supply of gold in the dore form & dores falling in between 90 to 95% purity. After our meetings in New York and then in Dubai with the clients we found they'd been swindled twice in Africa, which has one of the world's largest precious metal deposits but since most of it lies in areas where the law works in grey areas it isn't easy doing business unless one has on the ground resources. We set to identify sources in South America and thats when we went about meeting the right kind of resources who put us to reliable contacts on the ground and we started getting access to those in Brazil, Argentina, Peru, Chile and Suriname.
The thing with gold is that it has various kinds of deposits and for those who aren't aware the most feasible deposits are in Nevada in the United States (until now of course) and when one does a PEST analysis (Political, Economic, Social & Technological) Gold mining feasibility is something thats very important to consider as you can't mine at any cost and what makes it unviable are the above 4 factors. We've had also excited estimates of gold deposits where announcements have been made about largest gold reserves the most recent of which is the Ugandan Government announced they have a deposit of 31 million tonnes of gold worth approximately 12 Trillion USD at current prices. Till this was found the scenario looked like the one below.
So coming back to our story where we had to ensure that the gold made sense for purchase as the mere supply wasn't relevant till one had the right refined quality, purity, discounts on spot price, courier to take out the gold etc and this 'had to be' from a mine with not just a mining certificate but a 'responsible one' at that, having a country of origin certification, an 'assay certificate' and a legitimate 'business entity' to allow the export of it. This is where our role came in and something which seemed easy on paper but was a challenge to implement. While we met people, audited mines and engaged with stakeholders what we learnt was that the reason this business isn't easy is that transactions are often conducted under a veil of secrecy, the supply chain from mine to refinery has to be secured and people would prefer to work with known customers at lower prices than new ones offering higher ones (rather willing to take at lower discounts). In fact gold production has been slowing down due to the lack of efficient reserves and till the ugandan reserves are exploited or new ones turn up in Mongolia or South America this situation is expected to continue till the end of 2023.
Anyway cut to the chase we closed on the first procurement order using 3 simple strategies:
a. A network of honest, knowledgable and keep at it people who understood our integrity, intent and a lot of it had to do with the right body language.
b. We kept at it for months and had a simple philosophy "if someones done it before we can also do it".
c. We did our homework well on 3 factors: the country, the mine and the process of the transaction.
The business of gold isn't about margins but volumes, authenticity and reputation. There isn't a shortage of scamsters, fly by night operators and try hard brokers in this business as the buyers in this game are high value customers but the certification process from mining to exports to the supply chain expertise available has ensured that this business is only for those who are serious players. One things for sure- there's no surety about this business which is why it's precious and the method of closing transactions is definitely non-precious!