The same day they were removed from LBMA and COMEX, they became unable to make payments to customers, and on April 6 sent a letter to customers saying that they were discontinuing their high-grade-metals refining business. Apparently, Scotia Bank which has a lien on refining metal as soon as it is delivered to Elemetal Refining discontinued their line of credit and wanted to get paid back. Elemetal said that they are confident that they will be able to pay all their customers within six months, and that by delaying the payments they could avoid bankruptcy which, they say, could delay payments for years, and as I am all too aware hands out millions of dollars to attorneys and other professionals.
Note that while Elemetal Refining, LLC is shutting down its gold and silver refining, there is no indication that any of their other businesses are affected. I specifically asked Elemetal Vault regarding possible liens on metal stored with them which is owned by their customers , and they stated that there are no liens nor could there be.
And Provident Metals, while they would not answer my questions which I see as a red flag , appears to be delivering quickly slow deliveries were the biggest sign of financial problems with Tulving , Bullion Direct , and NWT Mint. But there is a reason that countries are cracking down on illegal gold.
The first and biggest problem is that illegally mined gold usually has serious problems associated with it. The Dodd-Frank legislation in the United States requires most larger companies to practice due diligence to ensure that any gold coming from certain countries is sourced properly.
As a result, many of these companies make statements regarding the source of the gold, and the statements rely on the results of their due diligence.
If they see that their gold refiner has certificates showing that they have been audited and their metal is conflict-free, then they may rely on that. Customers of Elemetal Refining should get paid within six months, according to the company. There is a chance that Elemetal Refining customers might band together to try to force Elemetal Refining into involuntary bankruptcy, but since Elemetal is confident that customers will get paid within six months, that could easily backfire.
Elemetal Refining mentioned that the whole refining process takes about four months, which would explain why it would take that much time to pay customers. On March 16, , U. District Judge Federico A. According to the stipulated facts filed with the court, from August through November , Elemetal purchased and refined billions of dollars of gold from countries around the world, including from Central America, South America, the Caribbean and Europe.
The international gold trade was a common method for laundering illegally mined gold, narcotics and other criminal proceeds. Criminals frequently trade illegal gold through illicit shell companies using false or incomplete documents.
The gold is often smuggled through third-party countries and then sold to refineries in the United States, in an effort to hide the true source of the gold from foreign and United States law enforcement. Recognizing the high risk of gold-based money laundering, federal law requires precious metals dealers to establish anti-money laundering programs, under the BSA.
Elemetal was subject to the BSA and aware of its obligations, but willfully failed to develop, implement, and maintain a reasonably designed anti-money laundering program as required. More specifically, according to the stipulated facts filed with the court, Elemetal:.
One, however, failed. The results suggest that the bar is gold, just almost certainly less than. My sense is that there are quite a few impure gold bars out there. At these levels of purity, I imagine it would require XRF testing or an actual assay melting the bar to determine the exact fineness. Any information would be helpful, but especially useful would be the type of metal e. Specifically, I have heard several reports of testing with less-than-pure results e.
I am trying to determine if this might be something as simple as a bad batch, a testing method that has false positives, poor quality control, etc.
You can either E-mail me or send any information anonymously, using the anonymous tips page. No reason was given for the dismissal. Although this could be done for any reason, it is likely that the metal was returned to them.
Alternatively, it is possible that the glass company chose to accept the Elemetal Refining payout schedule. It spreads the payments over 8 months, rather than the 6 months originally planned. However, the fact that the first payments will be made today is highly encouraging. Elemetal Capital Performs Surprise Inventory April 26, PM EST Elemetal Capital customers found out this morning that for the next weeks Elemetal Capital will be "performing an inventory audit", and not accepting any bullion sales to them.
Any customers sending them bullion in the meantime have their metal forwarded to Elemetal's scrap processors and will be paid the lower scrap rates. Elemetal Capital is the subsidiary of Elemetal that focuses on physical metal trading, metal derivatives, and foreign exchange. It is not uncommon for privately held companies to conduct inventory audits, so this could have been ordered by management.
And inventory audits do require a method to keep newly purchased inventory separate from the inventory that is being valued. Sending the metal to scrap processors would be an excellent way to treat newly purchased inventory in this case, except that it could significantly hurt Elemetal's business for those few weeks: some people will feel ripped off, some may switch to another wholesale bullion dealer.
What is surprising is that it appears no notice was given to customers. Not even a day or two to give customers who sell in batches to send what they have. This suggests an urgency behind this audit.
If anyone has more details about this beyond the E-mail that was sent to customers or anything else you think I should know about , feel free to E-mail me or use the anonymous tips page. In the arrangement they had with Elemetal Refining, the glass company would use pure silver as part of the process to coat glass, and then send Elemetal the impure silver that resulted for refining.
Elemetal would refine it, the glass company would sell part of the silver to cover Elemetal's fees, and Elemetal would return pure silver. The glass company states that the silver was always their property, and the only time the title would transfer to Elemetal is when the glass company sold Elemetal some of the silver to cover the fees in fact, exhibits include a trade confirmation showing the metal to cover fees being sold to Elemetal -- something that likely could not be done if the glass company was not the owner of the metal.
The glass company alleges that Elemetal has refused to return the metal. In that case, the title transfers to Elemetal the question being when; Elemetal stated that they believe it is on delivery to Elemetal.
However, in this case, in theory, the glass company should be receiving exactly what it sent minus impurities, and some extra silver to pay for refining.
That does suggest that the title would not transfer. On the other hand, it was based on an oral contract the standard Elemetal Refining contract seems to apply to Elemetal paying for the metal to be refined, not returning pure metal.
And the exhibits show that Elemetal refers to the glass company's metal being "credited to pool account to be returned" suggesting it would be Elemetal's metal. This does bring up some interesting questions. If this is all true, is the metal actually owned by the glass company? And if so, why is it not being returned? Was there a lien on this metal? Was the metal given to or sold, with the proceeds going to one of Elemetal Refining's banks?
NTR Predicted Elemetal Refining Demise April 18, PM EST Starting in late , a group in Colombia claiming to be "working for peace" started E-mailing NTR employees in Colombia including one of those that was arrested last month , and then published a defamatory website in late about NTR Metals and their operations in Colombia -- accusing them, among other things, of participating in money laundering and financing terrorism.
NTR Metals, of course, denies these allegations. They even initiated a lawsuit in Colombia to try to track down an punish the people responsible for the defamation. A legal representative for NTR Metals wrote, in Spanish, in February " It is also not surprising that [the defamers] would try to generate a hostile environment toward the oversight authorities so that they would start investigations against my clients and, with that, finish off its business.
He was then re-assigned to Colombia in January, The 3 NTR employees had known each other for at least 10 years, and had previously worked together at a different company. They started working at NTR in , , and This may have been several years ago.
I have just been told by Elemetal Vault that the metal purchased by Elemetal Vault customers is located in a Brinks vault in a different state. They also clarified that their client's metal is not and can not be subject to any lien. I posted a comment the next day, asking if he could confirm that there were no liens on their stored metals program Elemetal Vault. Someone there gave a vague response, but did not address my question. I then posted a second comment in response explaining the importance and asking for further clarification and sent an E-mail to their media address.
The stored metal is in a vault that has metal that 2 banks have liens on, so this is more than a trivial question. For nearly 48 hours, my second post would show up in my browser as "Pending Moderation", so presumably the public could not see it. But within the past 3 hours, my second post does not even show up in my browser. So they have gone from not answering my question non-action to deleting it an intentional action.
I really want to give Provident the benefit of the doubt here, but they are making it harder and harder to do so. As with my last post here, until Provident responds, I cannot recommend that people do business with Provident Metals. That may change, of course, but that is my stance for the time being. I commented, requesting clarification on metal stored by Provident's customers which sits in the very vault that is at the center of the NTR Metals controversy.
They gave a vague "Oh, that's not us" response. I asked for clarification, and checked with Elemetal Vault, and after more than 24 hours have not received a response from either.
So let's take a closer look at this. Provident is a subsidiary of Elemetal "An Elemetal Company" , and offers customers storage at Elemetal Vault , another subsidiary of Elemetal. The situation is bad enough that Provident blogs about it to do damage control. Two companies that had reputations similar to Provident went belly-up after lying about stored metal. So when I ask about the possibility that metal that Elemetal says is owned by customers might be subject to the lien, Provident does what?
They don't respond. Nor does Elemetal Vault. No answer. In my opinion, this is pretty damning. If Elemetal Vault metal is not actually owned by customers, this would appear to be a massive fraud -- and would be extremely damaging to Provident Metals. If I ran Provident, I would immediately respond, either with an answer, or giving a high priority to getting a detailed response. Despite no signs of financial trouble at Provident Metals itself, until Provident responds, I cannot recommend that people do business with Provident Metals.
According to the article: Elemetal Refining, LLC is still "open for business" Only the high-grade gold and silver refining has been suspended. They will continue refining copper and other base metals, and the minting and collection process. Stockmeister stated "We are solvent as a company and I am confident in our ability to pay everybody" It will take about 4 months "to eliminate the current refining streams they had in place because it takes that amount of time to complete the entire process.
NTR Metals of Miami is under investigation. Previously, it was unknown if the company itself was under investigation. Elemetal Refining was planning on sending a second E-mail to customers yesterday. If anyone has a copy, I would really appreciate it if you could send it to me you can use the anonymous tips page.
The original lease agreement was dated March 28, , so this is quite new. Why OPM was leasing metal is beyond my expertise. But like the Provident Metals lien, this lien applies to metal likely held in Elemetal Refining's vault, the same place where Elemetal Vault's metal is held.
This adds fuel to the fire regarding whether a bank or other company may believe they have a lien against Elemetal Vault metal. From what I can tell, assuming Elemetal is honest, this should not be possible.
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