How to read a gold offer

What is karat (carat)?

The gold content of gold alloys is measured in carats (k), pure gold being designated as 24k.

What means fineness?

Fineness says how much pure is the gold. E.g. if the gold comes from a mine it comes usually with silver
and copper together and is not pure.

What are gold bullion bars?

After refining the bars are then given 'good delivery status', the international standard for quality, providing
assurance that they contain the quantity and purity of gold that has been stamped on them.

What are dore bars?

Dore bars are shipped from goldmines. The most common means of recovering gold is the cyanidation
process. Cyanidation involves the leaching of ore in a strictly controlled alkaline cyanide leach solution,
after which the gold is then re-dissolved and subsequently smelted into door bars that are shipped to the
refineries. The residual waste rock is then generally recycled in land-fill or landscaping projects.

Gold with international accepted hallmarks, what does it means?

A hallmark is a mark or series of marks struck on items made of precious metals. These marks guarantee
a certain purity or fineness of the metal. It is important to differentiate between a Mark and a Hallmark.
They have different levels of guarantee of the caratage! A Hallmark is applied only by an independent
third party, typically an Assay Office, after the item has been assayed for gold content.

The Convention on the Control and Marking of Articles of Precious Metals (also known under Hallmarking
Convention or Vienna Convention ) is an international treaty between 18 Contracting States, which aims
at facilitating the cross-border trade of precious metal articles. States, which are party to the Convention,
recognize that articles, which have been marked with the Convention Common Control Mark (CCM) and
which are of a legal fineness, can enter their territory without additional control or marking.

In nations with an official hallmarking scheme, the hallmark is only applied after the item has
been assayed to determine that its purity conforms not only to the standards set down by the law
but also and with the maker s claims as to metallurgical content.

Traditionally, the hallmarks are 'struck' using steel punches. A new method of marking using lasers is now
available, which is especially valuable for delicate items and hollowware, which would be damaged or
distorted by the punching process. Laser marking also means that finished articles do not need to be re-
finished.

Why is gold with old hallmarks cheaper than with new ones?
Gold with Hallmarks older than 5 years is cheaper as with years gold looses its purity and has therefore to
be assayed again.

What does it means: price London 2nd fixing?

The London Gold Fixing is conducted twice a day by telephone, at approximately 10.30 am and 3 pm.
There are 5 London Gold Fixing members all of whom are Market Making members of the LBMA. They
are the bank of Nova Scotia-Scottia Mocatta, Barclays Bank PLC, Deutsche Bank AG, HSBC Bank USA,
Na and Societe Generale. The chairmanship of the Gold Fixing rotates annually amongst its members.

Pay attention: in some offers you will find 2nd fixing LME then you know that is not a serious offer, as LME
is only for non ferrous metals. So if the pricing refers to the London Metal Exchange don’t waste your time
with this offer.
What is the LBMA?
The London Bullion Market Association maintains lists of gold and silver refiners that have met the
Associations requirements for assaying standard and bar quality, and whose large bars are therefore
acceptable in the London market as Good Delivery.

What means assaying?

Measuring the gold content is known as assaying. A gold must be refined as because of physical defects
or poor marking.

Payment after Assay report, what does it means?

The buyer only pays after he knows the quantity of the gold which contents 24 k.

Nowadays we choose 2 different methods of assaying.

The Fire Assay (Cupellation)

The most elaborate but totally destructive assay method is the fire-assay, also known as cupellation, with
an accuracy of 1 part in 10,000. In this process the article is melted, the alloys separated and constituents
weighed. Since this method is totally destructive, when this method is employed for the assay of jewelry,
it is done under the guise random or selective sampling. For example if a single manufacturer deposits a
lot of rings or watch cases, while most are assayed using the non-destructive methods a few pieces from
the lot are randomly selected for fire assay.

Please note: If you want to sell 500 MT AU after assay report then please consider that there is a certain
capacity for the refinery. In the average you should calculate that a refinery can smelt about 4 MT per
day.

X-Ray Fluorescence
The modern X-ray fluorescence is also a non-destructive technique that is suitable for normal assaying
requirements. It typically has an accuracy of 2-5 parts per thousand and is well-suited to the relatively flat
and large surfaces. It is a quick technique taking about three minutes, and the results can be
automatically printed out by the computer. It also measures the content of the other alloying metals
present.

Why do sellers sell gold with discount?

There are several reasons. Can be economical reasons as the person, company, and bank needs money
for special projects. Can be political reason as a group wants to get more influence in another military or
political group.

For pure gold with new hallmarks the discount will be never more than 4% .

For gold with hallmarks older than 5 years you get usually maximum 7% discount.

For gold without international accepted hallmarks you can get up to 10% discount.

Then the discount various as the delivery can be CIF or FOB.

There is also gold without history for sale on the market, which means the seller cant or don’t want to
proof from where he got the gold. Put your hands away from that as it was for sure not bought with clean
money or even stolen. Best examples are in this moment the Iraq gold and the gold of Ex-president
Marcos.
What comes first? POF or POP?

Actually it is very simple. The one who wants to sell a product has to proof, that he has this product for
sale POP. And after POP the one who wants to buy the product has to proof his funds POF. So if you see
in an offer that under procedure it says first POF and then signing the SPA (Sales and Purchase-
Agreement) and after that POP, don’t waste your time. No serious buyer will show his funds before
knowing that the product exists.

It is like you want to buy a pair of shoes. You go to the shop and you see shoes! As you see the shoes
the seller has shown you the POP. After that you go to the cashier and buy them POF. If POF would
come first you would go to an empty shop and would ask for a pair of black leather shoes. And then the
seller would ask you first to proof, that you have money with you. And only after you showed him your
money he would say: And now I will show you a pair of black shoes or he would say, sorry, but we dont
have black shoes in your size. You see the nonsense!

So no discussion, always POP first.

How does seller shows POP and buyer POF?

There are 2 possibilities:

1. either in a TTM ( Table Top Meeting)

2. or usually in between the bullion officers at a window time. And first again POP and after that the
bullion officer of the buyer answers with POF.

How do I see that I have a real FCO of gold in my hands?

First of all let us say what is a FCO? 99,99% of the so called FCOs are not more than a Soft offer. A FCO
must be written on the letterhead of the seller with all his indications. It must say beside the basic
information the history of the gold and where exactly the gold is. To say in various banks or security
houses is not enough. Or some of them say in Asia or in Europe. Seller has to specify clearly the location.
A FCO must be signed by the seller. So if one of those points is missing you have only a Soft Offer.

Can a mandate sign a FCO?

Yes it is possible but then it has to be a legal mandate which she/he has to proof by the legal mandate
letter and copy of passport. A mandate is a person which is legally authorized by seller to act in and
behalf of him or her. 99 % of the so-called mandates are only intermediaries and don’t have the power by
law to issue FCO. If somebody calls himself a mandate but cant show a legal mandate letter she/he is
fully responsible by law and anybody can put her/his file to legal authorities like police, Interpol and
finance department.

But when I send a FCO with the sellers name then the other can circumvent me?
Yes that’s true that’s why it is so complicated to close a deal when you don’t know your partners.B2B will
never circumvent and I would recommend that you become a registered member. As we also prefer to
deal with people we know.

Commissions:
The last thing which has to be discussed is the splitting of commissions. If we put a real seller with a real
buyer together then it is time to talk about commissions. The fee for the intermediaries is an indemnitation
for the work and is to be paid by the buyer. So the persons who are involved have to consider how much
the really worked for this contract. It is absolutely unrealistic that somebody who just passed a name or
telephone number gets the equal share as somebody who is legal mandate or like other intermediaries
who are highly professional. As without those professionals a contract will never go through. And a lot of
buyers as they pay the commissions want to know exactly what each single person has worked in this
deal.

Most of the people are only thinking in percentages, please forget it. Notice that per tone the commission
of 1% is roughly 240.000 USD. So be happy if you are 1 under millions who has the chance to benefit in a
gold deal.

Special in a gold deal the commission is very high. But if it would be so easy to find a real buyer and a
real seller and to work with them to find a procedure which suits both, believe me the buyer wouldn’t t pay
this high amount.

What is b2b doing with the commission?

Nearly the whole commission will be put into humanitarian projects like hospitals, water boreholes and
electricity, foundations for medical researches and so on as we from B2B believe that everybody who
earns a lot of money has the responsibility to help other humans and animals and to protect nature.

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What you should know also:

Who owns the most gold in the world?
If we take national gold reserves, then most gold is owned by the USA followed by Germany and the IMF.
If we include jewellery ownership, then India is the largest repository of gold in terms of total gold within
the national boundaries. In terms of personal ownership, it is not known who owns the most, but is
possibly a member of a ruling royal family in the East.

How much gold is there in the world?

December 2005 there is about 153.000 MT gold in the whole world!

28.600 MT (18%) Gold centralbanks and other institutes

8133 MT USA
3428 MT Germany
3217 MT International Monetary Fonds
2892 MT France USA,Germany,intern. Fonds and France in total 3%
25.000 MT (16%) Gold are owned privat (goldbars and coins)
79.000 MT (51%) Gold in jewells
18.000 MT (12%) Gold in art

Please read the amounts very carefully and then check your FCO concerning the quantity which
is mentioned in the offer. Realistic???

How much does a gold bar weight?

Gold is made into a large number of different bars of different weights. The most well known are the large
'London Good Delivery Bars' which are traded internationally. These weigh about 400 Troy Ounces, i.e.
12.5 kg/ 27 lbs. Each. Others are denominated in kilogram s, grammes, troy ounces, etc. In grammes,
bars range from 1 g up to 10 kg. In troy oz, from 1/10 tr.oz. up to 400 tr.oz.. Other bars include Tola bars
and Tael bars.
How big is a tonne of gold?
Gold is traditionally weighed in Troy Ounces (31.1035 grammes). With the density of gold at 19.32 g/cm3,
a troy ounce of gold would have a volume of 1.61 cm3. A metric tonne (equals 1,000kg = 32, 150.72 troy
ounces) of gold would therefore have a volume of 51,762 cm3 (i.e. 1.61 x 32,150.72), which would be
equivalent to a cube of side 37.27cm (Approx. 1' 3'').

Why Do CENTRAL BANKS Hold Gold?

Monetary authorities have long held gold in their reserves. In 2006 their stocks amount to some 32.000
tonnes - very similar to their holdings 60 years ago. They know that gold can help protect a nation s
wealth against the ravages of inflation, and offers a safe haven in times of economic and geopolitical
turmoil.

What is about the gold of Thailand?

There are many stories flying around the net. It is forbidden to buy gold in Thailand. You never ever get
out gold from Thailand. Also the story that a plane with gold from Thailand was forced by military to return
to Thailand although the gold was legally bought.

Thailand is a special country and it is not easy to buy gold but it is not forbidden. There is also no law that
forbids to export gold.

But you have to be very familiar with the culture and the way of doing business of the Thais. Only with
very good personal contacts to government and military one will get a proper FCO and can start to close
a deal.

So please if you see a gold offer from Thailand like there are many circulating around the world and you
are not 100% involved in the gold business with Thailand dont waste your time.

How fast can you close a gold deal?

First you need a real seller and a real buyer. As nearly 99,99% of the gold offers are fakes you can
imagine your chance to find alone at the same time a real buyer and a real seller/offer.

Conclusions:
To find a serious seller and buyer you need a professional working network. B2B can offer you this
network. We are in the business since years and working with serious buyers and sellers. Due our good
contacts to banks and governments and our long experience we can check each offer and know very
soon if this offer is circulating around the world since years, if the gold really exists and if the seller really
wants to sell his gold. After the Due Diligence we can connect the seller with a serious buyer or vica verse
and the lawyers will work out the SPA.

So if you think after reading this article that you have a real seller or buyer, please contact us.
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