Small gold bars glow red hot as they melt and mix together in a crucible. Then the molten gold is poured into a mold to form a larger bar that will undergo a complicated fire assay process that will determine its purity.
On any given day in the downtown Miami office of Kaloti Metals & Logistics, a gold and precious metals trading house, millions of dollars’ worth of gold arrives, is melted, formed into bars, assayed and shipped out. Last year the company handled 22 tons of gold worth nearly $1 billion and is on its way to surpassing that in 2013.
Although Miami may have a reputation for glitz and bling, few people realize it is one of the hubs for the nation’s gold trade.
Last year — for the first time — gold was both the top import and export from the Miami Customs District, which includes airports and seaports from Palm Beach County to Key West. But the reality is most of the gold entered and left via Miami International Airport.
More gold arrived in Miami than any other U.S. customs district last year and it ranked third in outbound shipments of gold. The most common routes take the glittery metal from mines in Colombia, Mexico, Bolivia and Peru and the gold trading center of Curacao, to Miami and then on to Switzerland, the United Arab Emirates and the Dominican Republic.
South Florida is home to not only one of the largest precious metal refineries in North America — Republic Metals Corp. in Opa-locka — but it’s also a hub for bullion trading as well as assaying, refining, logistics and financing operations.
It’s a business of locked doors and bank-sized vaults. Because security is so critical and because even small amounts of gold are worth so much, those in the gold trade generally prefer to keep a low profile and many gold-related firms are family businesses.
But executives at Kaloti, which is located in the heart of Miami’s jewelry and diamond district, were willing to sit down and detail how their business works.
The Miami office is a relative newcomer — it opened for business a little more than two years ago— but it has a strategic affiliation with Kaloti Jewellery Group, a Dubai firm that has been in the precious-metal business for more than 25 years.
The day before the firm makes gold purchases, executives at Kaloti Metals in Miami tell the Dubai company how much gold they expect to buy the next day and Kaloti Jewellery provides the financing. “Before we even open the office the next day, the money is here,’’ said Awni Kaloti, managing director in Miami.
Kaloti Metals, which employs 15 people, gets its gold from a number of sources, but it’s a far different operation from the companies that advertise on television that they will buy your old gold jewelry.
It does buy scrap gold — mainly from pawn shops in New York, Miami and Chicago — but the bulk of its business is with gold traders and customers in Peru, Bolivia, Puerto Rico, Honduras, Nicaragua and Curacao — where many gold consolidators who deal with South and Central American countries are located.
Colombia and Mexico also are big gold exporters to Miami, but Kaloti currently doesn’t do business with them because executives consider the markets a bit riskier.
“Before we do business with anyone, we must know who our customers are and the source of their gold,’’ said Alvaro Rodriguez, the operational manager.