From Dust to Gold
Refiners can help you extract profits from scraps, not just cash in
Your store has valuable inventory scattered on the floor and dusted on desks throughout the entire repair area. Many jewelers actively use this source to generate cash or obtain newly refined gold or other precious metals. What is it?
Were talking about scrap metal.
All jewelers need to realize that scrap is like inventory and should be used the same way, says Ralph Crowell, president of Glines & Rhodes, a refiner in Attleboro, RI.
Adds Hoover & Strong President Torry Hoover, Scrap is cash, just sitting there on the shelf.
Retailers should treat these scraps with the importance they require, says Alan Light, owner of Precious Metals & Gems, West Bloomfield, MI. Instead of placing them somewhere out of sight, keep them in a jar or in a correct container in the safe. This sends a message to the staff that gold from sweeps is inventory to be handled with care. It also underlines the critical nature of conducting thorough sweeps.
All refiners emphasize the importance of paying attention to scrap gold and metals. More critically, refiners are emphatic that your store regain the value of its scraps and sweeps and suggest that settling these is a financial matter store managers need to control.
Depending on the size of the retail operation, this source of inventory is used at some point, but many jewelers need to ensure it is being used efficiently, says Crowell.
Frequently, say refiners, this resource is left until the last minute or is used strictly as a cash machine. When gold prices are high, retailers often seek the immediate gratification pegged to the value of gold. If prices are low, scraps are left to increase, ostensibly awaiting higher market prices. However, many refiners suggest that gold is better used as a source to create new jewelry that can be sold at far greater profit than is earned from a sweeps-to-cash settlement.
The goal is not how much you can collect, rather how you can efficiently manage it to get it back into the showcase to sell and make a higher margin, says Light. After all, if the retailers do well, we all do well.
Thats where refining companies come in. As experts at the technical processes needed to extract karat gold (or silver or platinum) from your scrap metal, refiners also can help you manage the use of this sometimes overlooked resource.
Crowell says large chain stores actively manage their scrap metal and sweeps, sending their collected results to refiners perhaps every two months or even more often. Smaller retailers are less able to spare an employee for this duty on a regular basis and generally have fewer scraps. But these stores can place the task higher on the to do list during the year.
Use the Gold
Smaller manufacturing jewelers seem most likely to settle their scraps and sweeps for the cash, say refiners. This is a time-honored tradition thats frequently necessary for myriad reasons. Many short-staffed, overworked store employees have little time to refabricate the gold theyve already sent in from a sweep to a refiner.
For larger retailers, the scraps and sweeps are often a separate operation from the making and buying of jewelry, so they remain separate operations financially and logistically.
But this is changing slowly. As more independent retailers create custom jewelry, whether by contract or in-house, the urge to redeem scrap for cash lessens.
The fastest-growing sector among the independent retailers we deal with are those with an on-staff jeweler, says Daniel Ballard at Precious Metals West, a Los Angeles custom refiner and fabricator. While part of that increase may be due to the clientele his company seeks, recent surveys by Jewelers of America show more retailers are doing custom work and generally realizing greater profit margins from it than for many other items they sell. For this reason, a closer relationship with a refiner/fabricator and supplier is critical. While Ballards company and others make the cash settlement of sweeps a simple matter, he says, retailers often work with his company to manage gold in a more sophisticated and often ultimately more profitable manner.
For instance, well set up accounts with retailers whereby they leave their refined gold with us and retrieve it whenever they need it. Frequently, these retailers later ask Ballard to create a specific alloy using the gold, often for custom pieces.
This helps avoid double-purchases, he says. Because the jeweler owns the gold already and is keeping it with Ballard, he or she wont need to send it in a second time for the alloy or fabrication request.
Such fabrication requests occasionally become exotic. Ballard explains that over the past several years, requests for rose gold have risen, and hes even received a few queries largely from designer metalsmiths for blue gold or purple gold.
Of course scrap settlement isnt the sole contact jewelers have with refiners. Custom jewelers can work out casting services with many refiners, often for small numbers of pieces, particularly as CAD-CAM model-making becomes routine. Also, most refiners will sell various standard gold and silver alloys in a wide variety of products. Dont forget solder, tubing, wire, brass, copper, zinc and a host of metals in between. New solders for use with platinum have received a good deal of attention recently. Others tout new formulations for white gold that eliminate or reduce nickel content. Numerous companies cater to independent retailers as well as chain stores and manufacturers. Contact the Manufacturing Jewelers & Suppliers of America, Providence, RI, at (401) 274-3840 for a variety of source materials.
Understand the Refining Process
Torry Hoover, president of Hoover & Strong, Richmond, VA, wants every retailer to understand the refining process. While jewelers know their diamonds, they arent always as confident about the differences between a floor sweep and a bench sweep.
He suggests jewelers be sure to weigh whatever they send to a refiner. Use a proper container and be sure to label each container with weight, contact data and type of sweep. He and other refiners generally request the floor sweeps be sent separately from bench sweeps for more efficient settlement.
Hoovers company posts a quick guide to understanding its refining process on its Web site. Heres an abridged version:
1. Arrival. When scrap shipments arrive, they are weighed twice and the amount is checked against the weight stated by the sender. If theres a discrepancy between the weights, the sender is called before the refining process continues. The refining coordinator records a description of the scrap, estimates weight loss due to non-metallic material and produces a karat estimate.
2. Smelting. In the smelting department, clean scrap (bench sweeps and filings, for example) is mixed with a special flux and melted. The flux makes the melt more fluid and homogeneous. Its then poured into a mold. The metal settles to the bottom, and the slag created by the flux remains on top, taking some of the nonmetallic impurities with it. After smelting, the bars go back to the vault to be weighed and sampled. The bullion remains in the vault until the retailer has been paid for the scrap.
3. Assaying. After the bullion is weighed, drill samples are taken from each end of the bullion. This sample is fire-assayed in duplicate to determine the precious metal content of the refining shipment. The assay lab does a miniature refining process on multiple samples to determine the precious metal content. The bullion karatage is actually determined by the percentage of fine gold remaining following the assay process. The results of the assays must agree. If they dont the bar is remelted to ensure its homogenous, then resampled and reassayed.
4. Floor Sweeps. These require more involved processing than clean scrap. Its impractical to melt down a sweep because of its large volume and low-grade gold content. The sweep is burned at a low heat to incinerate the combustible material. Then its milled into a fine powder and sifted. By producing a fine blended powder, the sweep is made homogeneous. A representative sample is taken and assayed to determine fine gold content.
5. Refining to Fine Gold. After assaying, the value of the scrap shipment is determined and the customer is paid. The material then is ready to be refined to its precious metal components. Hoover & Strong gold is refined in a two-step electrolytic process. Bullions are combined with silver and cast into anodes. The anodes are placed in a silver-based electrolyte, and the silver and most base metals are removed. The residual material is melted again into anodes and submerged in a gold-based solution. The gold is plated onto the cathode as fine gold or 24k gold; platinum and palladium remain in the solution where they are later recovered chemically.
by Michael Thompson
To see refining and manufacturing in action, go to Precious Metals West/Fine Golds Web videos for broadband users at preciousmetalswest.com/videos_for_broadband.htm.
||Refining services, demonstrated here in a photo from Hoover & Strong, give you a chance to offer money back for customers precious metal jewelry.
||The aqua regia process for refining gold uses strong acids to dissolve gold into soluble gold chloride. Pictured here, a technician at Precious Metals West in Los Angeles filters the yellow-green solution to remove various insoluble and non-metallic materials. Eventually the gold thats recovered will be placed in a crucible for melting and graining. Photo by Daniel & Donna Ballard.
Ensure your refiner is serving your best interests
Many jewelers are confident about their refiners. Still, as part of a scrap management process, some analyses of scrap and sweeps might reassure that youre handling the process efficiently.
At the American Assay & Gemological Office, the New York City office of the Birmingham Assay Office in Great Britain, CEO John A. Politi Jr. says retailers frequently send AAG their sweep samples for analysis.
Well provide an assay analysis, accounting for the gold, silver and platinum found in their sweeps, he says. This offers retailers a level of comfort with the settlement they receive from refiners. About one-third of the samples his office receives are sweeps. He suggests retailers send his office a small sample of a sweep sent into the jewelers regular refiner. The retailer can compare the settlements and work with the refiner more effectively. Analysis, on average, costs $25-$50.
Retailers increasingly realize they need to take a close look at their scrap management as an internal resource, says Politi. Independent sampling raises the bar on the efficiency of the retail operation, he adds.
- American Assay & Gemological Office, New York City; (212) 221-6565.
by Michael Thompson