Buying a gold bar may seem as simple as purchasing a finished product with a specified weight and purity. However, a great deal goes into producing each bar. Gold passes through several stages before it reaches dealers, vaults, financial institutions, or private investors. These stages can include mining, transportation, refining, assaying, casting, and distribution.
It is good to know the background of this process, because it will help you understand the importance of a refinery's standards, purity, weight, markings and handling of physical gold.
1. From Mine to Refinery
The process begins with the extraction of gold-bearing ore from a mine. The extracted material can contain gold along with other minerals and metals and cannot be processed directly into investment-grade gold bars.
Gold doré refers to a semi-refined alloy of gold and other minerals that form part of the types of gold sent to a refinery. When the material reaches the refinery, it is accepted, weighed and then refined ready for analysis.
This is important because before any refinement of the precious metal, a refinery must first determine the quantity of precious metal contained in the material. For example, the Perth Mint provides a processing schedule that starts with the delivery of doré to the refinery and the melting and sampling of the material.
2. Melting and Homogenisation
The ore containing gold is subjected to heating up to molten stage at very high temperature inside the furnace of the refinery. This results in a mixture in molten form which helps in making an even mixture.
This is because a representative sample is needed for the
process of assaying. The doré gold is melted in The Perth Mint Refinery where electromagnetic stirring and sampling takes place. The intention here is to make sure that the sample is representative of the material to be assessed.
This molten metal can then be further processed to extract gold from other metals and contaminants in order to obtain
pure gold.3. Assaying Determines Purity
A refinery may use more than one analytical technique. At The Perth Mint Refinery, X-ray fluorescence screening may be used alongside fire assay and other analytical techniques to assess the composition and purity of the material. Several samples may also be retained for umpire or independent analysis.
The significance of accuracy cannot be underestimated since the value of the
gold bar depends to a great extent on its gold content. It should be known that the weight of the bar does not always indicate how much of it is gold.
4. Refining and Casting the Bar
Once the gold is refined to the required degree of purity, it can be either cast or made into the required gold bullion products.
Investment bars are produced in different sizes suitable for the various markets and investors. There are some institutional investment bars available in
99.99% investment bars of gold ranging in size from 0.5 to 50 troy ounces, from the Perth Mint.
The
casting process is a very controlled process where the liquid gold is poured into the mould and allowed to solidify in the mould shape. Once the process is complete, the bars are examined and data is recorded on the bars for identification purposes.
5. Markings and Identification
The bullion bar is not just an ordinary piece of metal. The marks found on it play an important part in identifying it and knowing some of its properties.
Along with the mark showing the name of the refiner or the hallmark, other marks may show the weight, fineness, serial number and other relevant information about the bar depending on the type and the refiner.
The London Bullion Market Association (LBMA) has established specific criteria for the weight, fineness, appearance, and markings of Good Delivery bars used in the London market. These standards and markings help support confidence in the physical bullion market.
6. Quality Standards and Responsible Refining
It is vital for the standards adhered to by bullion refiners to provide the confidence needed in bullion. The LBMA Good Delivery standard is a well-known and respected international standard for gold and
silver bars that are traded in the wholesale global market. Accredited refiners need to adhere to the standards in such areas as production capacity, financial strength, responsible sourcing and quality of the bars.
Responsible sourcing is becoming one of the main concerns. The precious metals' supply chain is required to find solutions to the problems of the origin of metals and responsible business practice.
Investors may get some extra confidence in the origin and quality of the bullion if they purchase it from reputable market participants.
7. From Refinery to the Bullion Market
Once refined and manufactured into bullion products, gold becomes available for trading in the wider precious metals market. Depending on its size and category, a bar may move between a refiner, merchant, vault, financial institution, or other market participant before ultimately reaching an investor.
Throughout these transactions, secure logistics and vaulting are important. Maintaining proper documentation and records can help establish the identity and provenance of the bar as it moves through the supply chain.
The LBMA Good Delivery system plays an important role in the market for larger wholesale bars.
Why the Journey Matters
From the refinery to the investor, there is no doubt that physical gold has much more going for it than its beauty alone. The purity of the final gold bullion is ensured through processes like melting, assaying, refining, casting, identification, quality control, safe transportation, and expert distribution.
Knowledge of these processes can help an investor make the task of judging the quality, origin, certification, and marketability of physical gold coins and bars easier.
Confidence is a key component of purchasing physical precious metals. At Perth Bullion Exchange, we recognize the importance of confidence when it comes to purchasing physical precious metals. It helps the investor to make an educated choice about what they want to purchase and how to keep it.
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