How to Source Raw Gold Competitively and Reliably
The challenge represented by obtaining raw gold in good volumes is that those countries with reliable supplies and sensible regulations are necessarily well established national markets, where the rate of supply is almost precisely correlated to the demand generated by the principal refinery or refineries in that country.
Raw Gold from South Africa?
Take South Africa as the most conspicuous example of this. Any producer that is able to provide more than some 50-100 kg of raw gold every month will have obtained a contract with Rand Refinery. Those producers that are too small to obtain a contract of supply with Rand Refinery, will similarly be too small to be of interest to a foreign importer who would likely contract the services of Systech.
South Africa having virtually no raw gold market then, we must therefore look at markets that are in the process of development. And of course, one of the several reasons why the markets in these countries are not yet properly established is because the countries where raw gold is still obtainable are generally unstable, politically or economically. Obtaining raw gold in reliable volumes therefore necessarily requires trading with countries where the infrastructure is relatively undeveloped, and where Seller procedures are not well-practised in the saw way that they are in developed countries in which suppliers habitually and systematically trade with the same small handful of domestic and sometimes foreign, refineries.
Risks When Dealing With Developing Countries
The fact of the Internet being littered with examples of scams and deals gone awry is attributable to the fact that raw gold trades necessarily infer dealing with Sellers in countries where the infrastructure and minerals trade regulations are relatively undeveloped and barely regulated. And the fact of there being such easily circumventable regulations in these regulations presents opportunity for scammers and criminals.
All of this necessitates that the procedures deployed when trading in raw gold are absolutely water-tight and leave nothing to chance or the necessity to “trust” a Seller. A Seller may be trustworthy, but it is an unacceptable operational error to permit operating methods that rely upon any trust factor. Systech’s buying procedure is conceived to eliminate any necessity for trust.
From Kenya to Switzerland
While it is indeed possible to export gold to Dubai from some of the countries that are under US embargo – such as Uganda and Tanzania – it will not be possible to obtain authorisation from most European banks to remit funds to gold dealers that are incorporated within these countries. Where possible, until an established relationship exists between the buyer and seller, it is therefore recommended if initial trades are arranged with refineries in Switzerland, as the Swiss authorities undertake to serve as arbiter between buyer and seller, once the deal is registered with the authorities – something that has to happen before the Compliance departments at Swiss banks are permitted to approve counter-parties and release funds to them.
The fact of this involvement of the Swiss authorities ensures that there is no necessity for a Seller to request a Standby Letter of Credit (SBLC) – a request that banks have learned to decline from African dealers, as SBLC’s can be monetised by scammers.
Dodd Frank Section 1502 Blacklisted Countries
The US Government Accountability Office supplies an updated list of countries whose anti-money laundering measures are not deemed to be satisfactory with respect to ameliorating the risk of precious minerals trades providing proceeds for crime, terrorism, or armed conflict in known conflict zones. While arguably well-intentioned, the relevant legislation, the Dodd Frank Act, and in particular Section 1502, prohibits precious mineral exports from countries where mineral extraction is allegedly deemed to happen in conflict zones and may indeed be instrumental in perpetuating such conflicts. However, the logic of the Act has come under scrutiny by legislators within the US and architects of the Financial Choice Act, who argue that the Dodd Frank Act is a) penalising artisanal miners in the country, and b) creating a black-market / smuggling syndicate from the DRC to Uganda.
While it is likely that Dodd Frank 1502 will be repealed, as legislation stands at present, we are unable to facilitate trades where the certificate of origin is issued within the Democratic Republic of Congo, or any of its adjoining countries. The logic of this prohibition is that the DRC is clearly a conflict zone, and while the adjoining countries are not deemed to be conflict zones, it is deemed likely that minerals may easily be exported from the DRC into these countries while avoiding the scrutiny of the authorities.
The following countries are therefore currently blacklisted for raw gold imports to Europe and the United States:
- Democratic Republic of Congo
- Central African Republic
- Republic of the Congo
- South Sudan