Elemetal Refining Gold and Silver Brands No Longer COMEX or LBMA Approved

Special Executive Report
DATE: March 31, 2017
SER#: 7886
SUBJECT: Suspension of Warranting of Elemetal Refining, LLC (ELEM) Gold and Silver Brands

Effective March 31, 2017, 6:00 p.m. Central Time (CT), Commodity Exchange, Inc. (“COMEX” or “Exchange”) will suspend registration (warranting) of the Elemetal Refining, LLC (ELEM) gold and silver brands (Brand Mark “ELEMETAL REFINING AND JACKSON IN A CIRCLE WITH A STYLIZED E AND M IN AN INNER CIRCLE”) for delivery against the Exchange’s Gold and Silver futures contracts.

As such, any unwarranted ELEM gold (100-troy ounce bars and kilo bars) and silver at Exchange-approved depositories will no longer be deemed, or reported as, eligible for registration. Any currently registered (warranted) ELEM gold and silver through 6 p.m. CT on March 31, 2017 will continue to be deliverable against the Exchange futures contracts until such warrant is cancelled.

Once the warrant is cancelled, the material cannot be re-warranted until further notice. The Exchange notes that pursuant to an active review under their Incident Management Process, the London Bullion Market Association has moved ELEM to the LBMA Gold and Silver Former Lists, effective March 31, 2017.

The Commodity Futures Trading Commission (“CFTC”) will be notified of the aforementioned during the week of April 3, 2017 via the weekly notification procedures set out in Part 40 of the CFTC’s Regulations.

The LBMA have moved ELEM to the LBMA Gold and Silver Former Lists as of March 31, 2017, with Elemetal being subject to an active review under their Incident Management Process.

CME Group announced the suspension in Special Executive Report #7886:

Effective March 31, 2017, 6:00 p.m. Central Time (CT), Commodity Exchange, Inc. (“COMEX” or “Exchange”) will suspend registration (warranting) of the Elemetal Refining, LLC (ELEM) gold and silver brands (Brand Mark “ELEMETAL REFINING AND JACKSON IN A CIRCLE WITH A STYLIZED E AND M IN AN INNER CIRCLE”) for delivery against the Exchange’s Gold and Silver futures contracts.

As such, any unwarranted ELEM gold (100-troy ounce bars and kilo bars) and silver at Exchange-approved depositories will no longer be deemed, or reported as, eligible for registration.

Any currently registered (warranted) ELEM gold and silver through 6 p.m. CT on March 31, 2017 will continue to be deliverable against the Exchange futures contracts until such warrant is cancelled. Once the warrant is cancelled, the material cannot be re-warranted until further notice.

SER #7886 notes the LBMA’s moving Elemetal from the Good Delivery to Former List, “the London Bullion Market Association has moved ELEM to the LBMA Gold and Silver Former Lists, effective March 31, 2017.”

CME continues “The Commodity Futures Trading Commission (“CFTC”) will be notified of the aforementioned during the week of April 3, 2017 via the weekly notification procedures set out in Part 40 of the CFTC’s Regulations.”

As of April 4, the Elemetal website still claims “Elemetal Refining is the largest American-owned refiner of LBMA & COMEX good delivery gold and silver”, and carries full details of their LBMA and COMEX certifications listed as current at https://elemetal.com/certifications.

Insiders have been expecting LBMA to remove Elemetal’s Good Delivery status after Elemetal subsidiary NTR Metals became embroiled in a multi-billion dollar money laundering and gold trafficking scandal.

As evidence mounted against the NTR executives involved, the FBI arrested key staff, with the Dallas News reporting on NTR’s alleged direct involvement:

U.S. customs records “strongly suggest” that NTR began buying illegally mined gold in Peru in 2012, according to the complaint filed by Homeland Security Investigations and the FBI. NTR then began “smuggling illegal gold through a shifting array of Latin American countries,” eventually importing $3.6 billion worth from 2012 to 2015, according to the complaint.

As the news broke, the writing was on the wall for Elemetal’s LBMA accreditation.

In the words of LBMA “Because of the stringent assaying and bar quality criteria that applicants must satisfy to attain accreditation, the Lists are universally recognised as the de facto standard for the quality of gold and silver bars.”

We can only assume that smuggled gold and billion-dollar trafficking claims fall out with this de facto standard.

Elemetal can take heart that they aren’t the only LBMA Good Delivery refiners caught up in recent allegations:

Australia’s ABC Refinery, one of the country’s largest private companies, are distancing themselves from an investigation by the Australian Taxation Office for alleged involvement in a scrap-gold tax-reclamation loophole. The ATO is seeking $200m unpaid tax in a ­dispute with a linked ABC company (now in liquidation).

This is part of a larger operation revealing over $600m in lost taxes due to a Goods and Services Tax loophole being abused by “multiple” bullion dealers in the country.

Fellow Australian refiner, The Perth Mint “sent an estimated $1 billion worth of gold to India for refining without the ­apparent consent of its Australian customers” – a story covered by The Australian,

The [Perth] Mint has been repeatedly mentioned in an ongoing case in India’s High Court of Karnataka between Indian billionaire Rajesh Mehta and India’s Central Board of Excise and Customs.

And there’s talk of further investigations into LBMA good delivery companies, with reviews being carried out behind closed doors.

Although ABC and The Perth Mint both remain on the Good Delivery List, an industry insider told us this morning “This is only the beginning of more LBMA good delivery approved refineries being brought under more scrutiny“.

While we wait for LMBA to formally announce it’s removal of Elemetal from the current Good Delivery List – and it’s reasons for doing so – we should pause and ask what can be done to bring more trust to an industry that is so open to abuse.

Whether these recent events will harm LBMA’s trust as the “de facto” standard in gold, or bolster it’s reputation as the industry’s impartial policing force will all depend on it handling these and future scandals in an even-handed and transparent way.