Terry Sweetman has seen both extremes of life as a New Zealand gold buyer – from a group of West Coast hippies profiting from sifting through discarded materials at an old, closed mine to a $60 million scam in Canada.
Sweetman, who lives in Greymouth, began buying and selling gold in the 1970s when the price began to go up markedly, buying small amounts from miners tilling the black sands of the west coast and selling to gold refiners. Over the years he has bought and sold many millions of dollars' worth of gold.
He branched out into a refinery business himself for a time, selling it years ago, but kept on as a buyer, spreading his wings to places like Papua New Guinea and Canada. He typically spends every May to October travelling around the Yukon, around Dawson City, the town at the heart of the famed Klondike gold rush at the turn of the 19th century.
His life as a buyer is an interesting window on gold's value as an investment, its romantic, get-rich-quick properties and its modern-day role as a key wealth protection agent. He's seen the gold price as low as $250 an ounce and as high as $2250 an ounce.
"There's always a surprise or two," he says, thinking of the group of hippies on the West Coast, digging around the discarded rocks and rubble at an old abandoned mine in the 1970s. "That mine was near an old ghost town and they'd just been picking around in the rubbish left there – you can sometimes find bits of quartz with specks of gold.
"They came in with a half-pint preserving jar and said to me: "Do you think there's any gold in there?" I thought there might be a quarter of an ounce – turned out there was three and a half ounces and, in those days, it was selling at $650 an ounce. They were very happy hippies."
Not so happy was the refining company in Canada which fell victim to a scam when importing gold from central America. A sharp-eyed customs officer detected that the gold bars were, in fact, gold-lined lead bars – all $60m worth. The company eventually collapsed – leaving a gap in the market, part of the reason why Sweetman established himself in Canada.
"It's an interesting life dealing in gold," he says. "It's a unique substance and it has that aura about it."
Tony Coleman, managing director of New Zealand Gold Merchants Ltd, agrees: "Nothing looks like gold, and this is compounded by the fact that most other precious metals look a little bit like silver. To behold pure 24K gold in person is truly amazing, and it's easy to see why ancient civilisations used it for currency and construction of jewellery.
"The uniqueness of gold makes it very difficult to pass off fake products, which provides a level of security uncommon in other metals. It's also why selling gold is a viable option if you have any lying around."
The world's gold stocks are estimated to be 80 per cent mined – and not all of the 20 per cent left are economical to retrieve. But gold mining still has a sense of old-world romanticism about it – and the industry as a whole maintains a deep sense of secrecy and security.
Sweetman says it took him three years to become established in Canada, simply because of the secrecy and closed-shop nature of gold mining and selling: "People get so used to dealing with the people they deal with, they don't like to change; it's hard to break in.
"It's a matter of trust and it doesn't come easy. Once you're established, you have to keep that trust. What comes in the office, stays in the office. Someone might ask me, "Is so-and-so selling gold to you? I say: 'Ask him'."
Like many in the gold business, Sweetman believes in gold's ability as a wealth protector and an investment that acts counter to the "bubbles" that sometimes burst elsewhere in the financial world. Gold's latest upwards climb came after the 2008 global economic crisis, he says.
Coleman says: "In that 2008 crash, even gold fell by about 30 per cent in US dollar terms though it was different in New Zealand; the collapse of the New Zealand dollar kept gold stable here. Then gold rose and rose again to US$1921 in 2011 – a 270 per cent increase from its 2008 low. In New Zealand dollar terms, gold went from $837 per ounce to $2310, an increase of 275 per cent with no initial dip.
"That's what gold does – it behaves predictably in normal market conditions but it protects the downside risk in times of trouble. History shows that gold and silver helped to counteract losses from the huge stock market and property bubbles – a highly similar scenario to what New Zealand and the world is facing right now."
The rule of thumb is that 20 per cent of total net worth (outside your family home) should be in gold or precious metals, he says: "Even the big hedge funds hold gold; they know it will help get them out of bad positions."
Even with shipping delays affecting other products, gold and silver products can still be easily imported out of Sydney and Asia, as they offer high value-to-weight ratios, says Coleman.
New Zealand Gold Merchants partner with ABC Bullion, Australia's most innovative full service precious metals refiner, to import some of the world's best precious metals products: "ABC refine 35 per cent of Australia's gold and 85 per cent of their silver," Coleman says, "with a refining capacity of 500 tonnes per annum, so not being able to supply is a thing of the past."