Cohosts Victoria Gomelsky and Rob Bates talk to David Siminski, vice president of sales at United Precious Metals (UPM), about how volatility in the gold and silver markets has been affecting refiners. David also explains what it means to be a primary refiner—as opposed to a smelter—and offers advice for retailers dealing with refiners so they can make more money and be more efficient customers.

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Title sponsor: De Beers (adiamondisforever.com)

Show Notes
02:45 David’s background at United Precious Metals
06:15 How the refining business works
09:30 The effect of the metal backlog
14:00 How UPM is handling gold during this volatile time
17:55 New equipment to improve capacity
20:00 Tips for retailers
23:30 Pawnshops feeding the industry
24:40 Recycled gold

Episode Credits
Hosts: Rob Bates and Victoria Gomelsky
Producer and engineer: Natalie Chomet
Editor: Riley McCaskill
Plugs: @jckmagazine; adiamondisforever.com

Episode Transcript
This transcript has been abridged and edited for clarity.

Victoria:
Hey, everyone, welcome to The Jewelry District. We have a guest the likes of which we haven’t ever had on this show: Dave Siminski is in Buffalo, New York. He’s the vice president of sales at United Precious Metals, a primary refiner. We’re going to learn all about what he does, but he’s here, of course, to talk about metals—the subject of the moment. It’s been on every jeweler’s mind. The first piece of news many jewelers check in the morning is the price of gold.

Dave’s here to help us understand what’s happening in this marketplace, why it’s been so volatile, and what retailers can do to optimize their businesses and mitigate some of these challenges of replenishing inventory.

Welcome, Dave. Really nice to have you. You’ve been with UPM for many, many years now. Tell us how you got into the refining end of the business….

David:
I was recruited 33 wonderful years ago. I think that’s a significant thing in the jewelry industry, to be with one company for 33 years. And I think it’s one of the best companies in the industry. We’re big supporters of the industry.

How I got into it is, United does refining pickups around the country. We’ll go to customers and pick up some of their material or drop off some product. I started out as the second guy in a van helping load and unload drums. After my first two years at United, they noticed I have the gift of gab and that people like my disposition. So they moved me into sales, and it’s been a rocket ship ever since.

Victoria:
What was the price of gold in 1994? Do you remember?

David:
What always sticks in my head is $254.

Victoria:
How would you describe this moment? Does it feel unprecedented to you, or is this what you’ve always expected gold to do over your 33-year career?

David:
Gold has always gone up; it has always been on an incline. It [was] in the $250s when I started. Around 2009 or 2010, it hit that $2,000 mark for the first time. And then it went crazy. Then the “We buy gold” people came out and the Cash4Gold commercials happened. I’d be watching TV at home and I’d notice one of my customers who did a commercial. When I saw MC Hammer and Ed McMahon doing a Cash4Gold commercial, I thought, We’re going to have a problem.

But after 2011, the price fell back. Now it’s been on a steady climb. The problem is: January 1st, 2025, gold was around $2,825. For it to basically double in 15 months, that’s the problem—it hasn’t been over years. I remember when it was $3,200, then it went to $3,400, then $3,600, and then $4,000, and it didn’t even have a chance to build a base. It just shot up like a rocket.

The jewelry industry has a tough time with that. And so do a lot of people—the bullion industry—everyone does when it shoots up that fast and it’s so volatile.

Victoria:
Just to back up for a minute: Who are your customers? Are you serving retailers all the way through big manufacturers? Do you work with individuals? Tell us a bit about how the refining business works.

David:
United Precious Metals deals with three facets of the jewelry business: We do analysis, which is a small part. We’ll do a lot of testing for companies when it comes to karat color and plating thickness. But our mainstays are being a primary refinery, taking everything in from gold scrap to bench sweeps—anything in the manufacturing process. We bring all that in. We reclaim the gold, silver, platinum, palladium in those materials.

The final part of our business is making products: solder, wire, casting grade, master alloys. We carry about 250 master alloys that we sell all over the world. United has about 30,000 customers. Each customer is great. It doesn’t matter if it’s a hobbyist or a major company, international or domestic. From our standpoint, we help anyone in the jewelry industry that could use our services.

Rob:
With this crazy environment for gold, one might think, It’s great! Gold’s going up. But you said it’s been a difficult period for you and for refiners in general. Can you talk about that?

David:
It has been difficult. It really started back when silver went over $50 for the first time, about a year and a half ago. What happened then was everyone on the planet decided to sell flatware—their mom or grandma’s tea sets or forks and spoons. Well, they brought it to your local pawnshop, your retail jeweler.

Some of that weighs a lot, so there’s value there. Then refiners started to get inundated back when silver was at $50. And more things have been coming in. This is what started the backlog and capacity issues. Then silver went $60, $70, $80, up to $120 while it just kept coming.

Refiners got inundated with all this material coming in, and at the same time, we had what’s called “backwardation” in the market. The silver market wasn’t lining up between the New York price and the London. So lease rates in October shot up from around 3%. It went to about 200%, but a lot of our banks for a while were charging us 90%.

To put that in context, it’s like if all of a sudden your credit card went from 3% interest to 90% and you have a balance. Primary refiners hedge metal. We’re not looking to make money on the markets. So when it comes in, we’ll do the material, the assays, but we’ll also get the bank price so we can pay you at the same time.

But what happens when we have a backlog? Usually you send material in, and it takes us about a week to do it. Now, with so many capacity issues, it’s taking us two, three, four weeks, even months to do it. You want to get paid; we pay you. But then we can’t get it into the right form for us to put it on the market and get paid. So that’s the interest charges that we’re now paying.

When the silver was coming in, this wasn’t good silver, like 925 sterling. People were sending us flatware with the knife handles on. Well, the knife handles are steel. That brings the analytical and the assay down. Silver refining works differently than gold refining. In silver refining, the purer it is, the easier it is to refine. As it gets below 92, it gets harder for us, and it tears our equipment apart to do those lots, which means a longer time frame.

What’s happening is it’s becoming more financial than anything. People used to think about refining from a standpoint that it’s about labor, consumables, utilities. Not anymore. Refining is about finance.

Victoria:
It’s incredibly complicated. But tell us more about the situation now for refiners.

David:
The situation for most major refineries is, silver is still shut down. Some are taking a little bit of silver, but your bigger players are shut down. What they’re trying to do is deal with the backlog, to get it out the door because it’s tying up financial capital.

When all these markets started going up, governments around the world were no longer buying U.S. treasury bills—T-bills. They bought physical silver, physical gold. They emptied the vaults in London. The ironic part is you have a shortage of fine metal. You have refiners that have way too much metal, but the refiners don’t have the capacity to get that into fine metal. So as they get it in, it’s bought already. It doesn’t even hit the shelf.

People and countries are stocking up on the metals. When it’s coming to us, it takes us a long time to refine it, to get it to that point where the marketplace wants it.

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Victoria:
In terms of the volumes you’re dealing with at UPM, is it primarily silver? You mentioned you work with palladium and platinum. What else are you buying?

David:
The big ones are gold and silver. I explained the silver issue. Now the gold issue has more to do with gold’s high price, of about $4,700. You only have so much capital and so much capacity.

Let’s take UPM during this time. There were major refineries that were shut down for five or six weeks. They weren’t taking anything. UPM decided to take care of our regular customers. We were going to stay open, but we weren’t taking new business. So we’re just moving the gold through the system.

The problem is, gold is $5,000. The economy’s not that great. People are going to pawnshops [or] retail jewelers and cashing in their gold scrap. You might have had a customer last year that did X amount. Well, they’re doing Y amount, and they’re not doing anything different, but that 30% or 20% increase [in gold’s value] that they’re getting by the nature of the market—our whole customer base is basically experiencing that.

From our standpoint, the gold’s coming in, we’re processing it, we’re getting it out, and we’re really good at it. But it just keeps coming in. When it was busy in 2000, we used to average 30 to 50 boxes a day. And then in 2010, it went to, like, 125 boxes. Right now, some days we’re getting 200, 250 boxes a day. And it could be some gold, some silver, some platinum. Everything has to be weighed up and double-checked. These are precious metals. This is people’s livelihood. This is people’s money.

We could have 200 boxes, but it might be 300 or 400 lots. A lot could be a bit of platinum, bench sweeps, gold scrap. That has to go through the full melting process, burning, and analytical processes.

It’s not the best times for refineries right now because, to be honest with you, we’re beating the hell out of our equipment and our people just to get this stuff out. We’ve worked together at our company for a long time, but it just never stops. It’s like that Seinfeld episode when Newman says, “The mail never stops.”

One thing to mention is, people ask, “Do you get more precious metals? Do you get more scrap when gold goes up?” Believe it or not, it’s the opposite. We get more when gold goes down. If you have a stock that’s going up, very rarely are you going to sell it. That mentality is “That stock’s at $100, but I think you can go to $110.” So you hang on to it.

Now if that stock’s $100, but it falls to $90, you actually feel those are real dollars you’re losing. You’re not really losing until you sell, but it’s the same with the gold market. When the gold market falls $150, it’s like that. People think, “What if gold goes from $4,600 to $3,600 tomorrow?” Then people feel they lost $1,000 an ounce. “I was going to send in 100 ounces. I just lost $100,000.”

People always ask me where I think it’s going. If only we knew. It’s such a guess right now. It’s tough to try to depend something on it.

Victoria:
Do you see gold breaking $6,000?

David:
We do.

Rob:
Is it possible to bring in more machines, more refiners, build out capacity? Do you think that in the future, refiners will expand just in case we get into situations like this?

David:
Yes, and that’s why we just bought some new equipment. We bought a super oven a couple of years ago, but by the time we buy it, get it shipped, and install it, it’s a year project. Nothing moves quickly. When you buy new equipment, you have to look for space to fit it into your system, test it out, get delivery of the parts, you have to have installers. It’s a process in itself.

There are only a select amount of refineries in North America. We’re the end guy. Everyone feeds us in one way or another. Most of these other businesses are smelters: They just melt and prep the metal enough that they can pay on the analytical and pay a customer. They have a place on the food chain and they provide a service. We have to finish it.

We’re in a different realm. Even though we could do business for all the smelters’ customers, it’s different when you’re sending it off constantly. For us to add capacity, which we’re trying to do, it just doesn’t move fast. It’d be like trying to put a kitchen in while you have an existing kitchen. You need the existing kitchen while you’re remodeling the new kitchen. And that’s the problem.

The refiners used to traditionally shut down on July 4th week and Christmas week. Everyone would take vacation at the same time. That doesn’t happen anymore. During the times we used to shut down, that’s when we’d do maintenance on the equipment, get things replaced, make sure all the motors work. We’re working all the time now.

So, you’re trying to keep old existing equipment working while adding new equipment. If you’re down for a day, you’re stopping millions of dollars a day flowing through your facility.

Victoria:
Could you speak on what retailers might be doing wrong when they’re preparing their gold to send in, or if there are ways that they can optimize what they’re doing to make more money to be more efficient customers?

David:
The shows and the industry have done a wonderful job of providing education on this. This wasn’t available a long time ago. Rob would write an article every now and then, which really helped.

There are two things that retailers can do. It’s your material. Nobody cares more about your money than you do. The next person that does is me. Know exactly what you’re paying for, what the service is, and what it’s costing you. Understand how long it takes to process. That’s No. 1.

The more you can separate out the gold, silver, platinum, the better it is. When it mixes, it gets a lot harder for us to refine. We’re almost refining it multiple times and have to segregate that metal out, which takes more time.

I tell people, we use science. There’s a difference between a smelter and a refiner. If you want to know who you’re dealing with, ask your representative: (a) Do you make your own fine gold? And is it being sold on the open market? And (b) Do you have a water treatment plant inside your facility? Because if you don’t, you’re not a primary refinery.

You must have a way to treat those chemicals and water that comes in. Everything that comes into our facility is clean. It has to go out of our facility. And we have OSHA, the DEC [Department of Environmental Conservation], and everyone who comes calling to make sure that we’re doing right by everyone. When you’re a primary refiner, the misconception is, we throw everything in like a Crock-Pot and there’s a gold nozzle, a silver nozzle, a platinum nozzle, etc. That’s not how it’s done.

I think most people don’t really understand how how much we have to do to segregate out that metal. You can separate it the best you can from the retailer standpoint or the wholesaler. But if you’re working on four types of metals—gold, silver, platinum, palladium—it’s going to be in your sweeps. We’ll find it; it just takes us longer to do it.

Rob:
You said the volumes increase when price goes down. Are you still seeing heavy trade-ins to retailers, the people selling grandma’s locket?

David:
100%. It really is. The pawn industry is a big part of the jewelry industry. It’s funny—when we’re talking to some of the high-end jewelry folks, I say, “If we didn’t have the pawn industry, you’d be in trouble. They feed us the metal that we make for you, so you can make your designer pieces.”

But the pawn industry struggles because they need to keep so much of the case. The customer wants to come in, look at it, and buy it. But their customers might not be able to afford it with gold at $4,600 or $4,700. So now they’re taking things out of the cases that normally you might hold on to for a while. They’re turning it faster because that little bit of jewelry can be scrapped out for $25,000, to make payroll, make budget. There’s that danger of emptying out the case too much.

Victoria:
This idea of pawnshops feeding you so then you can turn around and feed the jewelry industry brings up the idea of recycled gold. When I started writing about jewelry in 2000, that wasn’t really a term. It just wasn’t something you thought about, even though on some level we all understood gold was melted and reused. What do you make of that terminology, and what can we consider truly recycled gold versus standard gold that’s just melted and reused?

David:
My definition is different than some of the certifications’ definitions. The definition of recycled gold is, already aboveground. You’re not going into the earth. You’re using what you already had here. From our standpoint, when we’re melting gold scrap or old inventory for people, it’s recycled because we’re taking it from one form and putting it back to 24 karats. It’s going to become new jewelry, and we didn’t do anything to disturb the land.

There are different certifications that have different definitions. However, the more parameters that you put on something, the harder it is for us to fulfill the industry. We are a good partner to the industry—green, clean. We’re trying to do it the right way. We’re in the United States. We have town guidelines, village, parish, city, state, federal to follow. But every time changes are made, it makes it hard. We’re trying to keep up.

We have those certifications that everyone sees if they go to our website. We’re paying tens of thousands of dollars for those audits to come in, which adds to our costs. Our compliance department used to be one person, now it’s seven, to make sure that we’re doing right.

We go on site visits all over the world just to make sure that the places where we get the material from are doing things the right way. We’ll spend our dollars to do our own internal review, because people want that. The majors push this to the manufacturers, to the wholesalers. So it’s a whole chain.

Rob:
Anything else you want people to know?

David:
Volatility is the name of the game. The president could say something tonight and the cost of gold could go up $100 or down $200. Something can happen and it can move very quickly. Usually I say don’t judge it on a one-minute conversation. Judge it after three days or so to see where it’s going.

My biggest point is, the jewelry industry is a relationship business, just like refining. We all support the industry, the trade shows, the associations. We’re all in this together. I think the better relationships you build with your vendor partners, the better off you’re going to be. And like I said, ask questions. If they’re good answers, you know you’re with a good partner. If they stumble on their answers, you might have to do some research.

Victoria:
Will we see you at JCK Las Vegas?

David:
You will.

Victoria:
Excellent. Looking forward to it. Thank you so much, Dave.

Any views expressed in this podcast do not reflect the opinion of JCK, its management, or its advertisers.

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