Mergers & Consolidation In The Physical Precious Metals Market

It hasn’t been merely the gold and silver price brutalized over the past two years in terms of precious metals. The ecosystem around the precious metals – retailers, in particular – has also been transformed in a play of consolidation and mergers.

There has certainly been a consolidation among distributor and retailers in the precious metals markets in recent months, and I believe only a fraction of the story has been laid out for the public.First things first, SilverVigilante reported a merger between NTR Metals and Ohio Precious Metals in 2012. As we wrote at the time:

SV has heard through the grapevine that NTR Metals & Ohio Precious Metals have strategically merged as of last week.

According to NTR’s website, NTR is a global company refining over 30 million pounds of metal each year. They are involved in commercial refining, industrial recycling and refining, precious metals market making, and bullion minting.

Ohio Precious Metals was founded more than 35 years ago and refine gold, silver, platinum and palladium. OPM receives their materials from jewelry, pawn, coin, photographic, electronic, secondary refining/collecting and banking industries.

According to an anonymous source, the two companies have merged. Further details are currently unavailable.

The NTR and OPM merger was merely symptomatic. The merger of these two companies created Elemetal LLC and Elemetal has purchased multiple companies in the last year. NTR recently purchased Provident Metals, and though this has been kept mostly underwraps, a press release exist. And it reads:

Provident Metals™, a leading online provider of bullion, currency and numismatic coins, announced that it has partnered with global precious metals company Elemetal, LLC.

Provident Metals offers a full line of sovereign and private bullion, currency and numismatic coins. Based in Dallas, Provident meets the bullion needs of precious metals collectors and investors across the United States and internationally.

Elemetal™ is a global precious metals company based in Dallas. Its principal holdings include OPM Metals™, NTR Metals®, Echo Environmental™ and DGSE Companies, Inc. Elemetal’s operations focus on precious metal recovery, refining, and minting.

Provident Metals President Joseph Merrick stated that this alliance will create unprecedented new opportunities for bullion customers and both companies. “Provident will significantly sharpen its competitive edge with industry-leading prices, increased product selection and faster shipping.”

Elemetal Chairman Alan Stockmeister added that, “This partnership allows OPM Metals an unparalleled opportunity to highlight its brand as the largest American-owned, COMEX deliverable gold and silver refiner and minter.”

Additional information about Provident Metals and its expansive line of products is available at ProvidentMetals.com.

During this period, Provident had been plagued online by reports of long shipping delays. Could the long shipping displays and eventual purchase by distributor (read: supplier) NTR come about due to financial problems?  This at the time cannot be known, however considering the bloodbath the metals market has been, this is certainly a possibility.

 major acquisition was Elemetal’s purchase of Dallas Gold Silver Exchange or DGSE, a publicly traded company. Elemetal, LLC, a global precious metals conglomerate based in Dallas, Texas, adds over 4 million shares of common stock of DGSE Companies, Inc. to its holdings. This merger came about due to intrigue and difficulty, for sure. More is known about this buyout than the Provident acquisition.

DALLAS, Jan. 7, 2013 /PRNewswire/ — On January 2, 2013, NTR Metals, LLC contributed 4,393,142 shares common stockof DGSE Companies, Inc. to Elemetal, LLC in exchange for ownership units of Elemetal. NTR also agreed to contribute its option to buy 5 million additional shares of DGSE.

Elemetal’s other principal holdings include OPM Metals™, NTR Metals®, and Echo Environmental™.

OPM Metals is the largest American refiner of good delivery gold and silver, and has earned SCS Global Services certifications for Certified Responsible Source Gold and Silver, and 100% Recycled Gold and Silver Content.
NTR Metals operates a worldwide network of over 70 precious metals processing locations in 12 countries. It serves more than 25,000 companies, ranging from small, independent businesses to large corporations.

Echo Environmental is a large-scale processor of hazardous and non-hazardous precious metal-bearing industrial byproducts. In 2012, Echo Environmental processed over 30 million pounds of these byproducts.

“We are pleased to expand our presence in the precious metals industry with the acquisition of a significant stake in DGSE,” said Alan Stockmeister, Elemetal’s Chairman of the Board. “DGSE’s retail buying and selling capabilities augment our integration strategy in the precious-metals industry’s value chain and increase our capacity to serve the varied needs of our clients.”
SOURCE Elemetal, LLC

Since the transfer, these shares have posted a $10 million dollar loss for Elemetal…

The company DGSE has been marred with problems:

On April 16, 2012 the Company filed an 8-K with the SEC announcing that the
Company’s financial statements for the periods ended in December 31, 2007, 2008, 2009, and 2010 could no longer be relied upon, including the interim quarterly periods between the second quarter of 2007 through and including the third quarter of 2011, and had to be restated. The 8-K accused the Company’s then “former Chief Financial Officer” (i.e., Benson) of engaging in improper accounting of inventory and other balance sheet accounts which caused the restatement.

While the precious metals market remains diverse, there clearly is documented tumult within the ecosystem. Elemetal has played a crucial role in this. While the company has been upfront about its work with OPM, Echo Environmental, NTR and DGSE, there is no mention on the website of a relationship with Provident. The relationship, to be sure, is confirmed by the aforementioned press release.

We suspect the reason for the tumult rests on the price action. Many distributors likely took positions that reflected their personal feelings for the gold and silver market: long.  This is anemic to the daily operations when running a business, so it will be interesting to see if such tumult continues.

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