The producer and buyer agree to sell at a contract price in advance of production. Hedging guarantees the miner an income for several years ahead. This benefits the small operator as hedging has stabilised the daily price of gold. Selling gold Most small mine operators sell their gold directly to gold refineries. The price received depends on the current spot price of gold less deductions for refining and handling.
Miners tend to 'shop around' the various refineries in order to obtain the best price.
Before gold is consigned to a refinery a sample of the gold should be removed from the bar and assayed. The miner will then know the purity and value of the gold. The sample is taken by drilling through the bar and collecting the shavings. Gold extracted from the earth is never pure, it contains differing amounts of other minerals such as silver, lead or antimony. The amount of impurities will reduce the price.