Gold Investor Series: Which brands can you trust when buying gold?

Written by Bron Suchecki, ABC Bullion Senior Precious Metals Analyst and Gold Industry Group Company Secretary.

When buying gold how do you know which brands to trust? How can you ensure you don’t get short changed on weight or purity?

Last month, Jordan Eliseo discussed the London Bullion Market Association (LBMA) accreditation process. While the LBMA’s “good delivery” only covers 400oz bars which would be out of the reach of most investors, accreditation ensures that the refining and bar manufacturing processes of an accredited company is of the highest standard. As a result, investors trust that any of the smaller bars produced by LBMA refineries will be of the stated weight and purity. A list of accredited refineries can be found on the LBMA’s website here.

While Australia only has two accredited refineries – ABC Refinery and The Perth Mint – many coin dealers import the products of other refineries to provide local investors with a wide variety of sizes and styles. If you are a conservative investor and only want to deal with formally accredited manufacturers, the LBMA list is an essential reference.

Some LBMA refineries only deal in wholesale markets while others will make smaller sized cast bars, as well as minted bars and coins for the retail market. In addition to ABC Refinery and The Perth Mint, other brands you are likely to encounter in Australia include Argor-Heraeus, Asahi, Elemetal, Metalor, PAMP, Rand Refinery, Royal Canadian Mint and Valcambi.

Many investors consider legal tender gold and silver coins issued by government mints as trustworthy, even though such mints are often not LBMA accredited. In most cases mints source the gold and silver blanks used to make their coins from LBMA refineries, but the fact that the legal tender status means the issuing government stands behind the stated weight and purity is enough for most investors.

In the past investors usually only bought products manufactured by LBMA accredited refineries and government mints, but with a rejuvenated gold price private refineries and mints expanded their product range and marketing and have become more widely accepted. The lack of formal accreditation does not indicate sub-standard quality – for example, privately owned Sunshine Minting in the United States supplies blanks to the US Mint for it coins.
One of the drivers behind the expansion of non-accredited precious metal firms is that they can be more flexible in product designs and themes. Coin dealers looking to differentiate themselves from their competitors and drive sales have looked to commission custom products that are only available from that dealer.

If you plan to carry or ship your gold overseas in the future, then sticking to LBMA accredited refineries or government mints would be best and these are more likely to be accepted (although that is no guarantee either).

In any local market, what affects the price that a dealer will buy your gold back is the ability of the dealer to resell it. If there is no local demand for that brand (no matter if it is accredited), then the dealer will have to send the product to a refinery and thus their buyback price will be lower to cover the additional costs they will incur.

So whether a product is made by an accredited or non-accredited manufacturer, what matters most is that it is a popular brand where you live and can thus be easily bought and sold. Certainly if the firm that you buy the product from stands ready to buy it back from you at a fair price that is a good indicator of liquidity but you can also check out eBay or review discussion forums (eg SilverStackers.com) to see what brands are accepted and traded locally.

READ OUR SERIES OF GOLD INVESTOR ARTICLES.