Legal Procedure for Precious Metal Trades

All precious metal trades rely upon the cooperation of financial institutions whose activities are overseen by regulators that have the power to suspend banking licenses. Onus is placed on banks by the regulators, of ensuring that all trades are conducted in line with current World Gold Council International Procedure. It is therefore not enough to ensure that both Buyer and Seller are mutually content with the buying procedure and terms.

Rather, it is essential that the banks remitting and receiving the funds covering the trade, are entirely content both with the supporting documentation, and also with the process and precise order in which it is followed.

With respect to these considerations, the following is the order and method in which all gold trades, without compromise, must be conducted. Note that when we refer to the “Seller”, it is understood that we refer equally to the person mandated by a Board Resolution issued by the Seller, to act on their behalf in such trades.

Order of Events

  1. The Seller issues a full corporate offer. All offers must show the Seller’s coordinates (identification) clearly.
  2. Only the Seller may issue an offer, and if it is the Seller’s mandate issuing it, it must be accompanied by the letter evidencing the receipt of mandate authorisation from the Seller.
  3. All offers received from non-authorised intermediaries are to be automatically rejected.
  4. International Precious Metals Legislation does not allow buyers to first send a Letter of [Purchase] Intent (LOI) because this is considered soliciting and is strictly forbidden.
  5. Seller must move first with an offer which should include a copy of their metal license (whether mining or dealing license) and their full bank account details.
  6. The Buyer submits a Letter of Intent and / or a RWA (Ready, Willing and Able) with full banking coordinates and permission to carry out a soft probe.
  7. The Seller and Buyer exchange signed and sealed contracts with full banking coordinates.
  8. Seller extends an invitation for the Buyer’s bullion officer to contact the Seller’s bullion officer.
  9. The Buyer accepts the invitation of the Seller’s bullion officer.
  10. The Buyer’s bullion officer initiates the contact with the Seller’s bullion officer by KTT.
  11. The Seller’s bullion officer will be instructed by the Seller to verify the metal, the quantity available, and to disclose any / all liens and encumbrances attached to the metal.
  12. Upon receipt of the proof of existence of the metal and the certificate of authority to sell, the Buyer will instruct his bullion officer to confirm the availability of funds to be used as payment when the gold is delivered.
  13. The Buyer and the Seller agree on a window time for exchange. The payment to the Seller must be disbursed within 24 hours against the transfer of ownership of the metal. Commissions must be paid immediately and without delay, to each appointed paymaster.
  14. The paymaster will likewise pay to the intermediaries their earned commission.