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Identifying Genuine Gold dealers - Gold Investment Series Part 4


Welcome to the fourth instalment of the Gold Investment series. Today's topic is about identifying genuine precious metals dealers. For our new viewers, if you would like to catch up on the previous articles, you can click the link: -

A Guide to Gold Investment Part 1

A Short Guide to Gold Fluctuations Part 2

A Guide to Selling Gold Part 3

To begin understanding how we can identify genuine dealers, we will be looking at the techniques used by the industry to determine the purity of a metal.

Key Term

"Assay": - The process of determining and examining the contents of a mineral. A technique used by refineries, scrap dealers, jewellers, assayers, and other precious metals dealers to determine the purity of a metal.

What are the available assaying techniques?

There are two categories of assaying techniques, "Destructive" and "Non-Destructive".

Let us begin exploring the "Destructive" assaying technique

Fire Assay: - The traditional way of determining the contents and purity of the metal. The fire assay can be traced back to the earlier times of men. Despite being an ancient technique, It is still considered the most accurate form of purity testing today.

Why is the fire assay technique still used today?

  • A fire assay utilises large sample sizes that result in higher accuracy in determining mineral content and purity
  • From a statistical analysis point of view, a larger sample size provides more accurate data. An analyst can derive exact mean values, identify outliers that potentially skew data, and produce a smaller margin of error.

How does a fire assay work?: -

A) The first step is to combine the sample mineral with lead and other control substances.

B) The second step involves the melting process conducted in a crucible (large pot) with the contents in the first step.

C) The melting process binds together the Gold with the control substances, in which the mixture is moulded and cooled.

D) Once the cooling process has taken place, the mixture is chipped into a cupel (small pot). The cupel absorbs the lead leaving only precious metals behind.

E) The leftover minerals are compared to the rest of the sample to determine the purity.

Non-Destructive testing

There are several methods to determine the contents and purity of metals without destroying it integrity: -

Stone Assay (Touchstone)

The touchstone is one of the earliest assaying techniques alongside the fire assay. It is a dark, hard stone with a finely grained surface.


Touchstone (Source: GIA)

How does a stone assay work?: -

A) A metal with known purity and sample metal is rubbed onto the touchstone.

B) The sample mineral is treated with nitric acid to dissolve other impurities.

C) Finally, a comparison of streaks of both metals to determine the purity.

XRF (X-ray Fluorescence)

The XRF method is one of the fastest and most accurate tests that does not affect the metal integrity. The technique involves measuring the percentage of purities by 'bathing' the metal in x-rays. The metal will emit fluorescence at a level specific to its atomic structure. The XRF analyses the energy levels providing a detailed analysis of the purity.

XRF Machine (Source: Thermo Scientific)

Electrical Testing (Precious Metals Verifier)

Electrical testing is the use of electromagnetic waves to determine the contents of a metal bar or coin. Chemically, each metal has a unique electrical characteristic. The precious metals verifier analyses the electrical structure through a pre-determined spectrum. If the metal falls within the scope, it possesses a certain purity.

Precious Metals Verifier

Precious Metals Verifier (Source: Sigma Metalytics)

The precious metals verifier indicated in the image above has the capabilities to identify the following: -

A) 916 (91.6% pure) Gold

B) 900 (90% pure) Gold

C) American Eagle Gold coin

D) Gold ducat

E) 80% pure Silver

F) Britannia Silver

G) Pure Platinum, Rhodium, & Copper

What should you ask to ensure you are buying precious metals from a genuine dealer?

The next step is to know where to find precious metals dealers and what questions to ask them.

Type of precious metals dealer: -

In the market, there are two types of precious metals dealers: -

Strict Dealers: - Companies that deal strictly in precious metals, such as banks that offer physical or digital Gold products

Jewellery Retailers: - These groups carry both jewellery and precious metals products that are available for sale.

What questions to ask your local dealer?

Invoice: - Does the purchase of a product come with an invoice?

As an investor, you must ensure the following items are stated in your invoice: -

a) Company details: - Business registration number, address, and telephone number

b) Order information: - Invoice date, order date, and invoice number

An invoice number is a reference that the company uses to identify a particular order.

c) Product information: - Product name, SKU (product identification number), weight, serial number, quantity bought, and value

Purity Test: - Investors can request a purity test when purchasing precious metal products.

Precious metals dealers generally have the capabilities to test the purity of finish precious metal products. Most of the test done is usually non-destructive. As previously indicated, a destructive test occurs when attempting to test extensive amounts of bullion scrap material.

Precious metals dealers will either use an XRF or PMV machine to determine the purity of the products. However, note that only some dealers may have these machines as they are relatively expensive to possess. The costs of these machines range from RM 4,000 to RM 15,000.

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