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How Does a Gold Refinery Work?

Gold starts off as small flakes and nuggets.
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  • Written By: Mary McMahon
  • Edited By: Nancy Fann-Im
  • Last Modified Date: 19 October 2014
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A gold refinery receives gold with impurities and processes it to generate pure gold for sale or alloy with other metals for specific purposes. Some refineries may accept lots directly from members of the public, while others work only with metal dealers. The facility has an assay station on the premises to assess the quality and value of the gold it processes on behalf of clients. Some gold refineries buy lots outright, while others may pay people based on the value of the assay at the end of the process.

The first step at a gold refinery typically involves weighing the lot. Lots can include recycled gold jewelry and product components, metal scraps, and so forth. If the lot contains combustible impurities like paper and cardboard, the refinery may put it in a low-heat furnace to burn these off and make the lot easier to work with during the smelting process. During smelting, the refinery adds a flux material to the gold and melts it in a furnace. The gold will sink to the bottom of the furnace, while impurities float to the top, bound to the flux in the form of slag.

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At the end of smelting, the gold refinery has a solid piece of gold bullion. It may still contain some impurities like trace metals, requiring it to go through a final refining stage where the facility melts the metal again and treats it to force silver and other materials to the top. One method, the Miller process, involves pumping bubbles of chlorine gas through the molten gold to force out the impurities, leaving behind a solid block of pure gold.

During the assay at the end of the process, the company will weigh the gold and test it to determine the level of purity. Pure gold obtains the highest prices, even if it is destined for an alloy with another metal. The gold refinery can sell the gold to other companies like recycled metal suppliers, jewelers, and electronics manufacturers.

The processes at a gold refinery can vary. Processing precious metals requires the use of caustic and toxic chemicals, and historically pollution was a problem with many refineries. Some companies pride themselves on environmentally friendly practices and may specifically advertise to customers interested in gold produced by environmentally conscious refineries. These companies control waste, use nontoxic materials when possible, and submit to independent audits to confirm that they are operating cleanly and safely.

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nony
Post 4

@Charred - You talk about selling gold; I was actually thinking of buying it, since it seems that gold value has been increasing.

However, I worry about the prospect of a bubble. All investments are subject to bubbles, from what I’ve seen. I really don’t think that there are any exceptions; yes, gold is more solid than paper money, but it can still fluctuate in price.

I may decide to wait things out before plunging into the gold market; then again, I could end up regretting my decision to wait years down the road.

Charred
Post 3

@David09 - You mentioned gold pawn shops. Those are the most convenient places to sell the gold I guess. However, I’ve heard that if you want to know where to sell gold for the most amount of money, you should do some research online.

There are some places that claim to be gold refiners and they say that you can sell the gold directly to them, effectively cutting out the middleman.

From their advertisements I’ve read you can get two or three times what you would get from the gold pawn shop. I’ve not investigated these claims to see if they’re true, but I would definitely shop around first before hawking your stuff to the pawn shop.

David09
Post 2

@NathanG - Gold prices have risen for quite some time. In our area there are stores that pay cash for gold.

People have been flocking to these stores in droves, to sell gold jewelry that they have had for many years. It’s an easy way to make some substantial money. It makes me wish that I had bought some gold a long time ago.

NathanG
Post 1

Our pastor told us a story recently about visiting a large gold mine in Africa. He was taken down into a cave where he saw nothing but tons and tons of solid rock.

There was gold in those rocks, but you couldn’t see it with the naked eye. He told how the rocks had to be crushed, melted and distilled in a very intensive refining process, just to get the little bit of gold that was in it.

Of course, this particular mine had vast quantities of rock, so in the end it was worth it I suppose (the amount of gold yielded through the whole process versus the time and money invested to produce that gold).

I gained a new found respect for the whole process of gold refining. I also thought it far less likely that I could get rich by “panning” for nuggets. The real wealth is in the depths of the Earth.

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