CIF or FOB what gives you more?
Many sellers are asking to sell gold and/or diamonds on FOB terms.
Let me then explain what you will get on a CIF delivery.
Provided that you go for a minimal delivery of 2 kg gold.
After 3rd trip you will make 100 000 USD more if you sell at CIF terms starting with 2 kilos!
The normal FOB price is 30 000 USD per kilo making a total of 60 000 USD.
The alternative to sell on CIF Rome International Airport you will get for the same gold 37 500 USD per kilo at a discount on todays LBMA price of 1237,50 USD/oz of 5%. This corresponds to 75 000 USD for the 2 kilos and an increased cash-flow of 15 000 USD.
Then your costs have increased by appr. 7% for the export costs and add another 1 000 USD for the ticket and visa. This ends up with an increased cost of 5 200 USD in total. Thus you are making an additional 9 800 USD net.
After the delivery of the two kilos you will have 14 000 USD in your pocket to spend on next delivery.
1 000 USD you set away for the ticket so you have 13 000 USD to spend on export costs.
Assume the the price of 30 000 USD per kilo includes a commission already then you can spend the 13 000 USD without any problem.
This corresponds to the cost to export of 6 kilo of gold. 6 kilo of gold will get you at FOB 180 000 USD and on CIF 225 000 USD per delivery. The extra 45 000 USD you will pocket 44 000 USD and save the rest for next trip.
With 44 000 USD to spend on export of gold you can now export 20 kilo of gold and pocket 2000 USD for your family.
20 kilo of gold is probably the limit of your travel capacity and your purchase capacity.
20 kilo of gold will cost you 600 000 USD on FOB terms and you will sell it at 750 000 USD on CIF terms.
Your profit will bring you an additional cash-flow of 150 000 USD and at a profit of 107 000 USD per trip.
What is it in it for me then? Enough I would say 1.5% of 750 000 USD will give me appr. 10 000 USD per trip you make. I am happy with that as well as the end buyer or the refinery.
Would you deliver to the refinery in UAE you will get more money and a better cashflow, but that is another thing.
By the way with a profit of more than 100 000 USD per trip why not start to buy stuff for the mining operation and through a company in Sweden.
So for 3 100 USD your will secure your and your family’s future as well as your mining community.
And you have only made 3 (three) trips with gold to Italy.
Why give that money to brokers or joker buyers?
