Days of Gold

We meet in a discreet office: two chairs, a small cupboard and a glass topped desk. This is “an activity that obliges us to guarantee privacy, discretion and security to those that seek us out – way above what people would normally expect from a shop”, Bento, 31 – trained in linguistics and business management – explains.

On the desk in front of him are some scales, a normal calculator and a laptop computer connected to the Internet. On the wall, there are simply legal documents: licences from “Casa da Moeda” and the firm’s logo.

“We buy precious metals principally for recycling. And these days gold is becoming more and more available for recycling – not just in Portugal, but on the international market.

More than it’s coming from the mining sector – probably because there are an increasing number of firms of this type, and just as many people and private owners trying to get out rid of their jewels”.

“The buying process is always transparent – whether the client has brought us gold, silver or platinum. The main criteria for evaluation revolve around weight and the prices for these metals on the stock market”, he adds.

Gold prices change twice daily on the markets. “Normally, it’s the morning price that interests our sector”.

Through newspapers and with the help of the Internet, most people “are very informed and have a pretty good idea” of what sorts of prices their items will sell for.

“But if we’re talking about a quality item – let’s say from a very good jeweller, or a piece that’s involves precious stones – of course, it has to be valued. It certainly wouldn’t go for recycling in the melting ovens!”

Sometimes “chemical tests have to be done, in the presence of clients – but if they have to be, tests are also carried out in the laboratory” to conclude any deal.

Gold’s connection with society is such that it is “impossible to describe a typical client”, while the demand for this type of service is also “totally unpredictable”. Other than Portuguese clients, the firm is visited by many Spaniards, as well as foreigners resident in the Algarve.

“And I would consider it wrong to think that people who visit us do so because they are desperate, and need the money. That’s a concept that exists, but which doesn’t really correspond to reality”, Bento continues.

“The majority of our clients are working people, on high salaries. But every now and then, unexpected situations arise where they need extra money.

Equally, there are those among them who come to the conclusion – because they’re intelligent enough to realise the fact – that gold has reached a record high, which it may well not maintain. And therefore they decide to sell up and liquidate”.

But what of the danger of dealing with someone selling stolen goods? “The legal obligation for a firm such as ours – and in any other sector dealing with used items – is that provenance must be produced, with a proper description of everything and its history. Clients are also required to sign a document where they declare themselves to be the legal owners – and this documentation has to be rubber-stamped and handed over weekly to the competent authorities”.

“If someone therefore is trying to sell something that he or she may have come by illegally, naturally those people would be loathe to identify themselves – and this would preclude any form of business transaction”.

The sale

In times of uncertainty, gold has once more come to be considered an alternative to the instability of other financial products, or more traditional areas like property. So it’s not surprising that “the major destiny” of gold sold by «Grão Vermelho» is for investment – whether by private clients or companies, to become part of their stocks.

There are also the (large) firms that buy ingots as “incentive prizes” for their collaborators and board members. This happens in the pharmaceutical industry, for example. “Before the recent cost cuts” pharmaceutical companies were “our best clients”, Bento recalls.

Either in its form as a gold bar, or as a coin, gold is the only capital that is exempt from VAT (according to “Decreto-Lei 362/ 999” of 16th September).

Gold ingots can weigh from as little as a gram to a kilo – and they are delivered within three days as, for security reasons, nothing of any value is kept at any of the «Grão Vermelho» agencies.“Unlike any other financial deal that investors can find on the stock market, gold has a totally different liquidity” Bento adds.

Another use for it is as a raw material for industries creating new pieces – but this is almost as a last resort. “The loss of purchasing power means that people cannot buy gold like they used to. These days, retailers and jewellers are not really selling. It’s a vicious circle – and there are so many industries in the North of the country, for example, that are now closing down after years of being in business”, he laments.