You want to get to as close to 100% payables on Gold Purity and Weight after Fire Assay results. This is where the cat skinning really occurs in many refineries the tricks of the trade are sleight of hand.
Some refineries pay a higher percentage and exclude the silver and other charge less and make silver payable. Think about that for a moment, do you want to be paid more in Gold or Silver? Trust me some clients just didn’t get it until we built a spreadsheet showing them the differences per ounce.
Some refineries even have been known to shave off purities from the output by the chemist to give the clients less payables. Remember is a scrupulous business to be in and it’s all about having a high turnover daily so you need more and more metal to make it work!
Then there is fixing the gold price for settlement, some choose to be unhedged (many mining companies opt for this) and many use the LBMA Gold Price which was formerly known as the LBMA AM or PM Fix (the name was allegedly changed to protect the innocent bankers accused of price fixing) whilst other traders like to hit the gold spot price.
When you are talking to a gold dealer he is looking to predict which way your order will be going (Buyer or Seller) and will shade the price accordingly, why does he do that? Well he needs to maximise his book and he has a slight moment of profit that he can run in the moment before closing out your position but rest assure if he gives you a price, then that is a firm price and you should always hold him to it!
My suggestion would be to never tell him if you are a Buyer of Seller! In some cases he will always know based on your profile, which is why you should wherever possible using a trading platform and fix the price yourself but do not the spread already has their profit baked into the price..
Many small traders will look at the Kitco app, this has a $1 spread and does not reflect the actual spot price you will deal on so get your refinery to give you market access to the Gold spot market so you can fix your own gold price.
