Picture this. It’s July, peak gold mining season. You’re a gold miner like Parker Schnabel, Tony Beets, Shawn Pomrenke, or any of the guys from Gold Rush and you have a problem: you have too much gold and not enough cash.
Where do you sell your gold?
This isn’t the Klondike Gold Rush. You can’t just sprinkle some gold dust on the bar in exchange for dinner. You need to turn that gold into cash. So how do you do it?
There are three main ways to go about it:
Private Cash Buyer
The quickest way for miners to exchange their gold for cash is through a cash buyer.
All gold mining towns have at least one or two guys floating around ready to change cash for gold, no questions asked. The miner walks in with gold and walks out with cash.
The biggest drawbacks to this is are that cash buyers in Nome will only pay 80% of spot price. It’s not as bad of a deal as you think, as placer gold isn’t pure (Bering Sea Gold averages 89-92% pure, which is quite a high gold content for natural gold) and there is usually a few % melt loss from impurities when it’s turned into bars.
That said, you’re leaving more than a few percentage points on the table.
Sometimes miners will find private buyers who will pay a little more than 80% spot, but not by much.
Of course, that gold has to be clean enough to buy. If the buyer is savvy, he’s not going to accept some dust that’s half black sand. The cash buyers will have to make a decision about whether or not it is “clean enough” to buy for 80% of spot price, or if he wants to offer another price.
That creates an incentive for the seller to get the gold just clean enough. A miner who’s hard up might squeeze a few extra shekels out of a cash sale by leaving some other heavy material in it on purpose (not to mention saving some time panning). But leave too much and the buyer won’t take it – you’ll have to go back to cleaning gold when everyone else is out on the town.
Since it’s a cash sale, there’s no record sent to the IRS. Claiming it on taxes is up to the miner.
Which, knowing gold miners, we’re sure all sales are scrupulously reported…
Miners will bring their gold to the local representative of these companies who weigh it and, because miners usually need money right away, cuts them a check that averages (in our experience) about 40% of spot price as an advance.
At that point the gold gets sent to the refinery where they will determine the purity of the gold.
The refiner will perform a fire assay which involves melting down the gold and creating a report showing the actual amount of gold and any other precious metals it contains. Oxford will show silver content while GRC will give a more detailed breakdown of the metals such as silver, platinum, copper, zinc and such.
Here’s a real assay from Oxford we got in 2020. Some information has been redacted.
The miner will get the report stating how pure their gold is and the percentage of other metals found. They have two options after that.
The first is to sell immediately to the refinery at spot price. The refiner will keep about 1.5% of spot price of the gold for the cost of services, which is a better rate than the cash buyer. They’ll take a higher % of other minority metals like silver.
The second option is to let the refinery hold the gold in a vault for the miner to sell at a later time. The drawback to this is that the miner doesn’t get as much money upfront but it’s a free way to securely store his gold until he’s ready to sell.
Refiner cash on the spot
If a miner doesn’t want to wait for a fire assay, they can take it to a place like Gold Buyers of Alaska.
The miner will need to bring their gold already melted down in ingot form where it’s tested using an X-Ray Fluorescence Gold Assaying laser (XRF Gold Assay). In XRF gold assaying, the gold sample is irradiated by an X-ray beam. The gold assayer then judges the metal purity depending on the intensity level of the X-rays emitted. This is a fast non-destructive method for testing the gold purity of the ingot but not always the most reliable according to some miners.
Gold Buyers of Alaska also offers fire assay services, but the XRF method is just quicker.
Direct to the end customer
The final way is to get creative, cut out the middleman, and sell your gold directly to gold lovers and investors all over the world!
That’s why we started BeringSeaPaydirt.com – to offer gold mined on the Eroica from the Bering Sea directly to you with no middle man.
The pros are it’s just FUN. We get to connect with customers and fans all over the US, Canada and the UK and get gold from the Bering Sea into their hands!
If you’d like to get your hands on some real Bering Sea Gold you can buy Gold by the Gram (in a vial, no panning required) or if you’re up for a challenge of panning get a 2 gram bag of Eroica Paydirt! All gold sold on this website currently is mined by Emily Riedel on the Eroica.
Many factors play into how miners sell their gold in Nome but usually the deciding factor is how badly they need cash at that moment. Remote gold mining towns aren’t cheap, and miners often need to hustle to get that shiny gold dust turned into cash to keep working.
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