Establishing an effective gold sourcing strategy is a critical consideration for any buyer that’s looking to buy gold from Africa. However, since many mistakes can be made along the way, it’s important to appreciate these possibilities in advance so you can safeguard against and ultimately avoid making crucial mistakes.

Africa is a valuable gold sourcing destination that’s emerged as a hotspot for gold buyers across the globe. purchasing gold from Africa is a great way to fulfill your gold business needs, where you can benefit from convenience, low cost, and scalability.

To curate a successful relationship with an African local gold miner, it’s important to understand the nuances of how to be successful buying gold from Africa, where there are many cultural and business differences to consider. By having an awareness of potential mistakes, you can avoid making unfavorable decisions relating to fraud, delays, quality, and miscommunication.

For example, many gold buyers start with a favorable costing arrangement but end up paying more in the long run due to costly mistakes.

However, all is not lost, since with the right guidance you can secure a mutually beneficial business relationship that maximizes the value of your gold business strategy.

But what are some of the most common mistakes when sourcing gold from Africa?

Poor Sourcing Strategy Planning

A well-planned, defined gold sourcing strategy will help you avoid potential complications, especially when you set out a road map with clearly defined goals.

It’s essential to have clarity on the commodity specification which should ultimately comprise the core values of your strategy. There are various sources for identifying the right gold seller, including google search, social media, b2b directory, and networking events. It’s important to verify gold sellers before proceeding, to ensure you’ll receive the timely delivery of your purchase from a reputable gold seller.

Taking out insurance is a great way to protect yourself when establishing the right gold sourcing method for you. You can choose between paying on a commission basis or through direct purchase, all the while ensuring safety management across the board. 

Not Requesting For Gold Samples

Gold sample are a useful way to determine whether your seller is capable of meeting your needs. Acting in good faith is ill-advised since by simply communicating your needs and hoping your seller meets them you’ll be leaving too much to chance.

Before finalizing any purchase agreement with a seller, you should inspect gold samples to ensure your seller have access to gold and you’re getting the quality you need.

However, it’s important to note that some sellers will offer a ‘golden sample’ to win over your request, which is why working with a local gold sourcing agent is beneficial for a whole gold inspections or preliminary assay.

Failing to Draft the Right Purchasing Agreement

It’s important to specify the critical details of your business relationship so you can safeguard against future issues. The best way to protect yourself is by signing a written agreement that includes details relating to:

• Gold quantity
• Quality standard
• Payment terms
• Dispute resolution
• Choice of law
• Timely delivery
• Attorney fees
• An Arbitration clause
• Liability for contract breaches

Because cross-border negotiations require special care, it’s important to draft up a fresh contract based on the situation at hand. 

An airtight sourcing contract will prevent you from being exploited by loopholes, protecting you from future disputes and complications.

Failing to Inspect the Whole Gold

Failing to perform a whole gold and quality inspection is a sure-fire recipe for disaster since ultimately the proof is in the pudding. You should always evaluate the conditions of a whole gold, whether you elect to use a third-party inspector or personally make the visit yourself.

It’s easy to fall victim to words not matching actions, which is why it’s so important to execute a closer evaluation of the circumstances in question. A personal visit is a great way to develop a personal connection with your seller en route to building a long-term business relationship.

A whole gold and quality inspection will give you a better idea of whether the seller in question will be capable of meeting your needs.

Failing to Perform Due Diligence

Have a local agent check the registration of the gold seller business, and check a few other things as well. More and more service companies and lawyers help gold buyers do this, and we can also provide a gold seller background check service in Ghana and Africa to our clients.

Note that the target company is NOT aware that one of their customers is running this type of verification on them. In many cases, though, the customer should be proud of it — it shows they are a serious customer, investing to build a solid and long-term seller base.

Poor Communication of Needs

The language barrier can be a difficult obstacle to overcome, especially when it comes to communicating your bespoke needs with a seller. There are also cultural and business differences to consider, which can impede your normal course of action when you lack awareness.

Many African embraces a culture of ‘not losing face’, so it’s common for African gold sellers to avoid clarifying areas of confusion that can ultimately cost you money.

That’s why it’s so important to secure effective, clear, and concise communication where all invested parties understand your requirements. This is where working with a  best gold sourcing agency in Ghana and Africa can be so effective, since their African presence, knowledge, and understanding can be leveraged to great effect.

Lack of Protection

It’s critical to implement steps for protecting yourself in the event of complications, so you’re ready to overcome obstacles if disputes arise. A written contract can be useful, but you should also choose a safe payment method to ensure you’re protected if you ever need to claim money back.

Among the best options for your gold sourcing strategy are a bank line of credit and an escrow service, which both safeguard you in the face of disputes. You must also clearly define in your contract the quality you desire before requesting an offer from a seller.

You can also protect yourself with insurance and have an alternative plan of action in case anything goes awry with your current seller.

Now that we’ve shone a light on the areas that need special attention when securing a gold sourcing arrangement, you should be one step closer to avoiding common mistakes. For further guidance and support, you should consider working with an elite gold sourcing agent like Iszy Gold.