Home Technology and Materials Gold and Palladium Prices Remain Steady Amidst the Financial Crisis

Gold and Palladium Prices Remain Steady Amidst the Financial Crisis

by Dave Weinberg

Dave Weinberg knows firsthand how important integrity and reliability are in the dental industry. Dave joined the family business and the Scientific Metals and team more than 15 years ago, transforming what had been a mostly regional company into a new national model that eliminated sales reps and middlemen to give dentists higher and more accurate returns on their scrap metal.

Since then, the company has worked with the American Association of Oral and Maxillofacial Surgeons, the American College of Prosthodontists and the world-renowned Seattle Study Club. “We’ve earned their trust time and again,” says Weinberg.

TPD: So, what do you think dentists don’t think about that you think about all day long, and your dad thought about for 30 years?

Dave Weinberg: The first thing that comes to mind is, because the refining business is based solely on trust, it’s one of the only industries where no one knows the value of the material until the refiner tells you what it is. I think the No. 1 misconception of dentists is that it doesn’t matter who they sell to, who refines it—they’re going to get pretty much the same return.

In reality, there can be a huge discrepancy, depending on how you sell or refine your scrap metals.

The business model of most refining companies is based on just pounding on the door of dental offices, going in with a scale and cash, separating the white-looking metals from the yellow ones, and paying cash on the spot. With all the different metals these days, it’s a very inaccurate approach; it’s almost impossible to look at a batch of metals and determine the value based on visual inspection. So the cash offer’s very low- we have seen cases where it may be as low as 30% of the melted value.

TPD: Can you give us a quick example of a dentist who received a cash offer who declined the offer and then sent to you for a full melt and assay?

DW: Dr. Skidmore, a dentist in California, got a cash offer for $950. He passed it up, sent his metal to us and ended up getting $2,300—the actual melt value was almost three times as much as the cash offer. That’s not an aberration; that’s a typical case where the cash offer could be as low as one-third of the actual value.

TPD: They separate the scrap into a white pile and a yellow pile and give a predetermined price per gram?

DW: This approach is a poor financial decision for dentists because now, for the first time in years, the palladium market is more expensive than gold. Dentists and assistants and office managers don’t follow the palladium market, and that’s where the confusion comes into play. Now the white pile, traditionally discarded as an afterthought while the focus was on the yellow gold, may be worth more than the yellow pile because of the palladium. Dentists don’t know that, and that leaves a lot of room for potential error or dishonesty.

However, in defense of some of these people who are paying cash, it’s not necessarily that their intentions are not ethical; it’s also that they don’t know what’s inside the scrap. It could be palladium at $1,800 an ounce, or it could be nickel, which is worthless. Because of that uncertainty, the offer on the white pile is low, and that potentially leaves a lot of money on the table.

TPD: Dave, you also mention the cost structure of Scientific Metals and how you guys are well set up to offer accurate and honest scrap returns. Explain.

DW:

It’s great you bring that up, because I wanted to explain a couple things about middlemen, reps, etc. A long time ago, we used to have some reps also, but we decided that there was really no benefit. Back in the day, they’d pick it up and save you time from boxing it up, but nowadays we find that dentists don’t mind boxing it up and sending it if they’re going to get more money. So we got rid of our reps. Labor is probably the biggest expenditure for all companies—especially refining companies.

One of the pillars to why dentists tell us our returns are the best is because we can afford to pay you what we say we’re going to, because our costs are so streamlined and efficient because we save so much by not having one single rep in the country.

TPD: The bottom line is, the only secret to lower price is lower cost. If people have a middleman, you’re paying for it. It’s just that simple.

DW: Let me give you a real example to put the theory into practice. Dr. Kelly Waggener in Santa Rosa actually wrote an article about this. A new trend among some big refining companies is to partner with dental supply distributors and while the distributors are selling products in the office, they also do the refining. But guess what happens? Now you have the refining company rep getting a cut, you have the dental supply company getting a cut, you have the refining company making their fees, and you also have the dental distributor company getting a cut. Four or five different people getting a cut.

Dr. Waggener sent her metals to a company through their dental supply company and they sent her an email saying she was getting $3,017. When she broke down the commissions, fees and additional charges that she discovered, she said, “No, the fees are too high; there’s too much involved. Send me back my metals.” They sent her metals in the form of a melted bar that she then sent to us, who she found through Dentaltown, and on the same exact bar got $4,700 or $5,000—about 40% or 50% more. Not for a similar batch of metals, which would be hard to compare, but for the exact same bar, because there were so many fees and middlemen involved that all those charges added up to about 35–40%.

Dr. William Wong in West Allis, Wisconsin, similar to Dr. Waggener, had his scrap melted and the offer was $9,400. He too discovered all the not-so-noticeable fees and asked for his bar back. He sent it to us and got $12,700 for the exact same bar. And the thing is, when we assayed the bar, it was the same assay as the first company—meaning, we both got 47 gold and 10 palladium, etc. The difference was, they had additional fees because of all the different reps involved. We didn’t have that fee structure, which resulted in an additional more than $3,000 for Dr. Wong. We’re very proud when we hear stories like that.

Dr. Licato, same thing: His offer from another company was $10,400. Got $12,200 or $12,400 with us—and that’s even after the palladium market had gone down from the time he got his first offers. But despite that, he still got 25–30% more on the same bar.

TPD: Do dentists shop around to see which refiner pays the most? How can a dentist determine who is paying the most before sending in?

DW: I am glad you brought this up. We get a lot of inquiries about our fees. And I always stress the fees a company quotes should not be the focus: the focus should be on the amount of money you get back. I think the most recent case was with Dr. Culberson, who had a bad experience with someone else and then went back to us and said, “You know, these guys get it.” The problem, though, is when you have someone in the office, sometimes the temptation is very great because they say, “How much does Company X charge you—10%? I’ll do it for 5%.” But just because someone’s offering you 5% fees as opposed to 10% fees doesn’t mean that you’re going to get more money back. Many of our customers tell us that their LOWEST scrap return was from companies who actually quoted them the lowest fees.

If it’s too good to be true, usually it is. Dr. Arpad Sooky posted on one of the dental forums a while back, “Thank you Scientific Metals, for being one of the seemingly last refining companies with honor and integrity.” I’m really proud of that.

For more information , please call Scientific Metals at 1 (888) 949-0008 or visit on-line at www.scientificmetals.com.

Dave Weinberg

Scientific Metals

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