Ep074: Fifty Years of Precious Metals with Larry Drummond
The strongest industries are built on relationships that outlast individual transactions. In this episode of the IC-DISC Show, I sit down with Larry Drummond, Executive Director of the International Precious Metals Institute (IPMI), to talk about what fifty years of industry collaboration has taught him about trust, transparency, and building lasting business connections. Larry shared how IPMI started in 1976 when a group of New York-area scientists came together to share data across competing precious metals companies. After 25 years at Engelhard and a leadership role at Metalor, he came out of retirement in 2018 to lead the organization he had served as a volunteer board member and past president. What struck me most was Larry's description of an industry where someone can be your customer, vendor, and competitor at the same time. He shared examples of refiners picking up the phone to ask competitors for help during operational setbacks, knowing the favor would be returned without losing customers in the process. The conversation reminded me that even in commodity-driven businesses, transparency and verified trust create the foundation for everything else. With IPMI's 50th annual conference coming up in Orlando, Larry's perspective is a great preview of what makes this industry tick. SHOW HIGHLIGHTS * In precious metals, the same company can be your customer, vendor, and competitor at the same exact time. * IPMI was founded in 1976 by New York-area scientists who recognized the value of sharing data across competing companies. * When operations go down, refiners call competitors for a week of help, knowing the favor will be returned without customer poaching. * Record-high gold prices flooded refiners with material, but financing costs and capacity limits turned some lots into losers. * IPMI memberships pay for themselves through the price discount on a single annual conference registration. * Portable x-ray guns have transformed the industry, letting even small operators verify what they have before shipping it up the chain. Contact Details LinkedIn - Larry Drummond LINKS Show NotesBe a Guest About IC-DISC AllianceAbout IPMI TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Larry Drummond: Unique things about this industry is that someone can be your customer, vendor, and competitor at the same exact time. Those relationships, even with your competitors, I can't say there's any kind of big precious metal company that something hasn't gone wrong in your operation at some point in time. I've personally been involved in situations where you could pick up the phone and call your competitor and say, "Listen, I need help for about a week." And they will handle some of your materials and not steal your customer because they know one day they may pick up the phone and call you. David Spray: Good morning, Larry. How are you this morning? Larry Drummond: Very good, David. Good morning. How are you? David Spray: I am great, thank you. So you are, I believe, the executive director of the International Precious Metals Institute, is that correct? Larry Drummond: That's correct. David Spray: And I guess the organization goes by the initials, right? IPMI? Larry Drummond: Yes. Everyone refers to it as IPMI. When we do legal documents, we use the full name, but for the most part we just use IPMI. David Spray: Okay. So can you just tell me a bit of the history of IPMI? Has it been around very long? Larry Drummond: Yeah. Well, we've been around very long and it's very appropriate we're doing this podcast today because we're celebrating our Jubilee year this year. So we were formed in July of 1976 and the history is that a group of scientists in the greater New York area where there was many major precious metal companies had formed, got together because they saw the need to share scientific data. And what's important about this is the pathway that they set still lives on today where people, member companies openly share a lot of information. Now again, they don't share their total trade secrets, but they share information where collectively the industry gets to benefit from that. David Spray: Okay. So Larry Drummond: It was started by a group of scientists and we've grown from there and we'll talk more about that during the course of the podcast here. David Spray: Okay. Well, that is great. And so when did you join the organization? Larry Drummond: So I joined in the late '90s, around 1997 I think was my first PMI. And the IPMI is really founded on volunteerism. There's actually only two of us that are employees and the rest are volunteers. So I was one of those volunteers and very early on got involved with the board of directors. I worked for Englehart Corporation for over 25 years and Englehart was one of the cornerstone founding members. Now it's owned by BASF. So in 2002, I joined the board and the executive committee and before we had term limits, I served on that for over 13 years as a. Oh, wow. And including all the officer roles and I'm also a past president of IPMI, which is a volunteer role. David Spray: Okay. And then at some point you shifted from being a member to being the executive director, is that correct? Larry Drummond: Yeah. I'm the past president for the Americas for Medalor Corporation, which is now part of Tanaka. And I retired in 2015 for a brief while and in 2018, I went back to work for the IPMI as the executive director. David Spray: I bet that must be great to be able to reconnect with all your longtime contacts in the industry. Larry Drummond: It's true. And it's really one of the key attributes of IPMI is really building relationships. If I could, if you look at our tagline, it's connecting you to the world of precious metals. And when I talk to people, especially people getting involved for the first time, I said, "Well, what does that mean?" I said, "We can boil IPMI down to really a few words and what they mean." It's connect, learn and build relationships. I was fortunate that I've spent essentially my entire career in precious metals, again, joining Ellhart in 1979. And some of those relationships that I've built over the years still exist today. So it's really one of the key things that we try and stress to people is to really build relationships. And the important part about that is that our industry, the transactions are very high value in terms of the precious getting transacted. And in many cases, you as a vendor are sending what you think to be a known amount of precious metals contained in some form that a refiner has to refine and produce fine metal out of. So there's a lot of trust involved. So building those relationships, it's trust but verified trust. Building those relationships is key and it's something that our members are very good at and personally that I've benefited from over the years in my career. And to this day, like you mentioned a few minutes ago, there's still many colleagues that I have that I've had relationships for over 30 years, you know what I mean? Wow. David Spray: Yeah, it's so interesting because on the surface it's a commodity. And so you would think that relationship wouldn't matter. You would think that just, "Hey, I'm buying two ounces of gold or a pound of gold and here's the price and we agreed on the price. And so what's the need for the relationship?" But I think you bring up a good point. It's because the seller may not know completely to the gram maybe how much material they have or the grade of the material. Is that kind of where that trust comes in? Because they think they're selling one thing, the refinery gets something and their team says it's slightly different. Is that what happens? Larry Drummond: Well, again, the trust comes in because many, I would say most of our member companies really have state-of-the-art laboratories, especially the big refineries and those are accredited laboratories. I David Spray: See. Larry Drummond: So there's techniques in terms of sampling and analytical procedures that really define how much metal is in particular a lot and it's not a perfect science, but it's a science that's been developed over the years. And so there's that trust, but it's verifiable trust. David Spray: Understood. So I imagine now when you came into the industry, did the people selling the material to the refiners, did they have that same type of equipment to know with that same precision or is that something that's just evolved as equipment has gotten more precise? Larry Drummond: Well, it's evolved over the years, particularly with the advances and the portable x-ray guns that now almost anyone can buy and afford. So if you're a very small company sending stuff up through the sort of food chain, if you will, of transactions, you can have a fairly good idea of what you have. David Spray: Okay. Okay. So what do you enjoy the most about this executive director role? Larry Drummond: Really, I think the thing I enjoy the most is really to see people building those relationships and I try and foster that. In other words, there's especially any new member or new attendee that comes to one of our events, there's an open door policy where, hey, if there's anyone you want to meet, myself or one of my colleagues will introduce you. And so I think really the thing I get the most out of it is really seeing those new developments in terms of relationships and then the fostering of the old ones. That's really what I get out the most. And one thing I want to highlight is we're going to be coming up to our annual conference. For any first time attendees at our annual conference, there is a kickoff social event on Saturday afternoon and it's by invitation for all first time attendees and myself, some of the officers, some key members, some past presidents are present at this social function and at this social function we just give some words of wisdom, if you will, on how to best navigate your first IPMI conference. And again, we'll stress this building of relationships and we'll also, again, stress this open door policy. If there's any particular person you want to meet, just let us know and one of us will make sure you get introduced. David Spray: I really appreciate that because I think you may recall that this will be my first conference. Larry Drummond: Exactly. David Spray: I saw that first timer event. And it's interesting because I've been a member of REMA, the Recycled Materials Association, also known as ISRI for 20 years or so. And I really just stumbled across one of your members as one of my team members who's doing some research trying to find more scrap metal people and they kind of stumbled on this person and they ended up becoming a client and they said to me, "Oh, you've got to be at the annual conference. We're happy to make some introductions." And yeah, it seems like there's a lot of similarities between that and the industry I know a little better the recycling scrap metal industry in terms of relationship, duration of relationships, networking. So yeah, I'm just so excited to attend. And I'm doing the whole thing. I'm coming in the day before on Friday so I can play in the golf tournament and go to that new timers, first timers event. I'm really looking forward to it. Larry Drummond: At the first timers event we started a few years ago now and it's really proven to be very worthwhile. We've gotten a lot of good feedback on it. So yeah, we're looking forward to seeing you and a bunch of other new people at that event. David Spray: Yeah, that sounds great. Are you doing anything different for it being the 50th annual or is it just business as usual like any annual conference? Larry Drummond: No. Well, again, we have our annual conference agenda, which is again, a combination of technical presentations and social events. And if I could maybe just expand a little bit on that for those that may not have attended, again, it kicks off technically we kick off Saturday night with an opening reception. We've developed an agenda to have pre-events prior to the opening reception and that's the golf event and we have another one at the same time as the golf event, a pickleball tournament for those so inclined to play pickleball. And then there's a session for the student meet and greet. So these are for the graduate student awards program that we have and the first time attendees. But then when we kick off on Sunday morning with the actual programs, it's designed basically to have technical presentations in the morning. There's usually one right after lunch, but then from about three o'clock on, there's a variety of social functions up through 10 o'clock at night each night. Culminate- David Spray: Yeah, to encourage that networking, right? Larry Drummond: Exactly. And a lot of our attendees have wall to wall meetings. I view my role in putting on this annual conference as offering sort of a smorgasbord of items in a combination of technical items, obviously the food and beverage and the social events, then everyone can pick and choose what they need to do. There are some members that will attend every technical session. There are others that may have 30 meetings set up over the course of. So again, what we try and do is provide that landscape, if you will, so that everyone can pick and choose what they need to do when they need to do it. David Spray: Okay. No, that makes sense. Yeah, like I said, I'm super excited to be there for the 50th. Let's see. And that'll be in Orlando at the Hyatt Grand Cypress Resort. Larry Drummond: Yeah. So we're at the Hyatt Grand Cypress and just a word to those who have not registered yet, you can register right up until the conference. The one issue we have is that the hotel is sold out on the Monday and Tuesday evening. So if you go on our website, you'll see we've put some alternative hotels. The one good thing about this location, we listed four or five, but there are probably 25 hotels within a five-minute Uber ride of the Hyatt because it's basically right next door to Disney Springs, so it's pretty accessible. David Spray: Okay. Well, that sounds great. Yeah, one of the questions I had was whether it was too late Larry Drummond: Not David Spray: To register. Larry Drummond: David, if I could, I don't think I fully answered the ... So for the 50th, so we have the presentations and the social events, but we're also working in throughout the days and evenings celebratory items of the 50th. So there'll be some videos playing. There's a lot of different graphics. So we're working a bunch of things in with the branding of the 50th, if you will. David Spray: Okay. Yeah, no, it's pretty exciting. In fact, I'm on the website. They have the countdown clock, 22 days, 23 hours, 42 minutes and two seconds. Did the attendees have to be a member of IPM or is Larry Drummond: There a David Spray: Guest option? Larry Drummond: No, no. You do not have to be a member. You'll see if when you go to a register, if you are a member, then you get the member price. So there's basically at all our events, the members get a discounted price, which is one of the benefits of membership. So there's a price delta, if you will, for non-members. And what we've done, you could see it's not much, but we've made it a little bit of a incentive, if you will, to take a couple of minutes out and join as a member because you can actually save more than what the individual membership costs. Corporate memberships obviously are a little bit more expensive, but for an individual membership, the price you pay for the membership is actually a savings compared to the price difference you'll pay for an event for one event. David Spray: Yeah, I noticed that. I joined I think about a year ago, nine months ago and this will be my first actual event and I noticed that. I noticed the price delta and I registered early. I have my hotel room and I noticed that. I'm like, wow, that membership's a no-brainer. It pays for itself if you just go to one event. Larry Drummond: Exactly. And we try to encourage that because again, some people maybe they just don't want to be bothered or have the time to take out. But the problem is even if you just go to one event by being a member, then you have access to all the information, the newsletters, the website. When we do have an event, then there's an app for the event. So you get all these other benefits as well. David Spray: Okay. And where is IPMI located physically? Is it in Orlando? No. Larry Drummond: So physically we have, it's myself and Sandra Orranz, who is our longtime administrative manager and she has an office in Pensacola, Florida. I'm working out of my home here in New Jersey, but physically we have an office in Pensacola. David Spray: And I must say Sandra has been wonderful to work with. I can't believe how ... She makes me feel like I'm the only member that she has to help and I know I certainly am not. So yeah, she is so impressive. Well, that explains it that she's been doing this for a little while. Larry Drummond: It's a funny story. One of my predecessors, and it's the reason we're in Pensacola, by the way, he was an executive that retired from Roman Haas in Philadelphia and he retired to Pensacola and he was the one that they hired to be executive director at the time, this was over 25 years ago. And so he was looking for office space in Pensacola and he happened to go into this office where Sandra was working, which that particular business was going out of business. Oh, really? David Spray: Well, Larry Drummond: The office space became available and they hit it off, had a great conversation. As you could see, it's very easy to talk to. So the joke is the internal joke that we have is Sandra says that she came with the furniture. David Spray: Now, will she be at the conference? Larry Drummond: Absolutely. That's great. David Spray: I look forward to finally meeting her in person as well as meeting you physically. Larry Drummond: She'll be there manning the registration room, which is front and center. You'll see once you arrive at the hotel and we'll be there in force. David Spray: Now do you have the latest registrar headcount? Is it in the several hundreds? Larry Drummond: Yeah, we just pressed it over 500 the other day. So we generally are in that 500 to 525 range, so we will probably exceed that this year. Despite the discounts that we offer, you'd be surprised at how many people still register rather late. David Spray: Yeah, I guess some people, their schedule is just harder to commit to that far out. Now you said you're in New Jersey. Are you from New Jersey originally? Larry Drummond: Yeah, I'm born and raised in New Jersey. And again, starting back with back in the late '70s, which was New Jersey based headquartered New Jersey and like I said, now BASF. So no, I've been in New Jersey in my entire life. David Spray: Okay. Yeah, there's some beautiful parts of the Garden State. I've got several clients in New Jersey and especially the Jersey Shore is ... Yeah, it's just so funny because I'm in Houston and Houston has elements that remind me of places in New Jersey in terms of if your only experience in Houston is just driving through town on Interstate 10, or if you've only flown into the airport, your perspective is, oh, it's industrial, there's a lot of manufacturing, chemicals, and it seems like not a great place to live. But when you get off the beaten path and you get into the real neighborhoods and the rural areas, you realize just how beautiful much of the state is. Larry Drummond: New Jersey is very much like that. A lot of people have the perception that everything is like how it is right around Newark Airport there and I could tell you it's not. When you get 30 minutes outside of that area, as you probably know, there's so many beautiful areas. David Spray: Yeah. So what about the future of the organization? What are you and the board excited about over the next five to 10 years? Larry Drummond: What we're excited about and what we've been working on is really to try and expand a bit to what I call sort of underserved segments and not optimally served geographical areas. So yes, we are the International Precious Metal Institute with heavy membership from North America and Europe, but we also have a lot of member companies from Asia. So in terms of the underrepresented segments, we've been working with the jewelry industry to try and expand the members and the attendees that we get directly from the jewelry industry. We have a bunch of people involved from the jewelry scrap side of things. Actual jewelry manufacturers were trying to expand on that. And so we've collaboratively joined forces, if you will, with CJO, CIBJO, which is basically an association of associations of the jewelry industry and we have an event. They're actually celebrating their hundredth year this September in Italy and we'll be attending that event. So we've been attending for the past couple of years now to try and build on that. And geographically, one of the key areas, again, we're trying to work on a bit more and again, collaboratively in the Asia Pacific area with different organizations there to try and, again, cross fertilize it a bit as best we can. As an example, we have people speaking at conferences there and vice versa, inviting various people to speak at our event. In fact, you'll see it's pretty predominant. On the Monday morning we have a session called the World of Precious Metal Finance Gold and Silver, and we have three different speakers from Asia as part of that gold and silver panel. David Spray: Oh, that is great. And I noticed that on the agenda. I plan to go to as many of the events or the educational things just to learn as much as I can. But like you mentioned, I think my assistant already has me tentatively scheduled for about 15 meetings while I'm there. So it'll be a balance. Larry Drummond: One of the things I wanted to mention about, and this is, I think, important for those, especially people coming for the first time, is we've consciously adjusted these agendas over the past few years. If you go back in time, some of the IPMI meetings from many years ago, it was technical sessions all day long and then people just felt the need for meetings. Then there was three to four hour sessions for a bunch of years, but what I've done since I took over is we've really changed the timing of the sessions to be either 75 or 90 minutes, some are 60 minutes so that someone like yourself, they have 15 meetings and there's some people that may have even more meetings than that, you can pick and choose when you're doing, say, "Listen, all right, I really need to go to that golden silver one or this one." So when you're scheduling your meetings, you can then take that 90 minutes and just block it out so that you can attend certain sessions that you really feel that you want to. The other thing I've mentioned too is in the case that you just simply can't make those sessions, all attendees get a complete prospectus of all the presentations That are made after the conference. And the only asterisk I'd put on that is that we have to get authors permission to release their presentation to everyone. But I can tell you from past experience, it's like 99% of those presenting give us the authority to send it to all attendees. So that's another benefit that you have that if you are tied up in meetings that you still will get access to those presentations. David Spray: Well, that is great to know. And I think you said you joined the industry, you joined Englehart in 79, is Larry Drummond: That David Spray: Right? Larry Drummond: Yes. David Spray: So you've been involved with IPMI for almost its entire time of Larry Drummond: Being? No, I wouldn't go that far because again, I came up through finance. I was a very young accountant for hard back and David Spray: Stuff. Oh, okay. Larry Drummond: But as I grew into mid-management, if you will, by the mid 90s, that's when I started to get more involved with things like the IPMI. David Spray: I see. Okay. So you've only been involved about half the time that Larry Drummond: It's- Yeah, so just slightly more than half. Yeah. David Spray: Okay. And I'm just curious, since you've been involved in the industry, what comes to mind as one of the one or two biggest changes in the industry since you've been involved? Larry Drummond: I think really what's developed over time is this, I saw it when I first got involved, but it's much more so today, is the openness and transparency. So again, going back to what I said on the earlier part of this podcast about these building relationships, it's a two-way street obviously for everyone. But one of the unique things about this industry is that someone can be your customer, vendor, and competitor at the same exact time. David Spray: Isn't that interesting? Larry Drummond: And so I think that's what I've seen develop more and more as time goes on is this real sort of congruence of those kind of relationships. And as you'll see, when you attend the events, there's a lot of critical and detailed information exchanged. And obviously in private meetings, there's even more, but I think that's one of the key things that we've seen is that real transparency. David Spray: No, that sounds great. And it sounds like what maybe hasn't changed is just the importance of the relationships. That probably sounds like that's been consistent over the whole time. Larry Drummond: That's key. And those relationships, even with your competitors, I can't say there's any kind of big precious metal company that something hasn't gone wrong in your operation at some point in time. Let's just say you're taking an inventory and you're supposed to be back up in operation next Monday and something happens and, "Hey, listen, you're going to be delayed a week." I've personally been involved in situations where you could pick up the phone and call your competitor and say, "Listen, I need help for about a week," and they will handle some of your materials and not steal your customer because they know one day they may pick up the phone and call you and say, "Hey, listen, we had a power failure, we had this, " whatever the situation was, but that they may need a helping hand too. So that's one of the key things that's really great about those relationships. David Spray: What about has the center of the gold industry shifted more to the Middle East or the Middle East role? Has that changed over time? Larry Drummond: Well, obviously there's a lot going on in the Middle East, but there's a big shift in that into the Asian market and that's one of the reasons why we have a predominance of Asian presenters and panelists as part of that golden silver session. David Spray: Okay. These record high prices, what's the impact of that on the industry other than I would assume ... Well, why don't I just ask you, what's been the impact of that? Has it been a good thing, a bad thing? Is it neutral for the industry? Larry Drummond: Well, I'd say overall for a lot of our members, it's a good thing, but it's a good thing that didn't also come with a lot of pain, if you will, along the way. So yes, generally speaking, the higher prices are better, but there was also a tremendous increase in the financing costs. And so as an example, if you think about the sort of supply chain of gold scraps, so this we buy gold stuff. So there's a corner store in a little shopping center where you live, we buy gold and that sells to another person who sells to another person who sells to maybe depending on the size of that operation, a couple of steps involved before we get a member company buying bigger lots and then it winds up going to the ultimate, what I call primary refiners or smelters where they're taking in scrap and their output is fine gold that's deliverable to the various exchanges like the London, Abullion Market Association, things like that, or into New York. But because so much material came out when this price came up, many of the refiners were getting filled up in terms of their capacity very quickly. And in this sort of refining gold business, it's a beat the clock kind of situation where you're settling with your customer and then you're transforming that metal into fin metal in your operation and then selling it to the marketplace. And So from the time you settle with your customer, which there's generally a preliminary settlement for almost the whole value of the lot upon receipt or day or so, a couple of days after receipt, you're financing that medal. So what a lot of member companies found was just inundated with material. And the issue is yes, even though you could possibly make more money because of the higher prices and the very slim percentage that they contractually get to retain as part of their commercial transaction, if the finance costs and the operation costs exceed that, then you're losing money on that lot. So there was a period of time where everyone along the line from the small guy all the way up, the financing cost and the timing of free capacity affected the situation. David Spray: Wow. Wow. Well, Larry, I can't believe how the time has flown by. Was there anything I didn't ask you that you wish I had? Larry Drummond: No, I'll just maybe put one final plugin for our annual conference. Again, for those of you who have never been to an IPMI conference, this would be a very good one to start your IPMI journey on. So again, June 6th to 9th in Orlando, Florida. There's still time to register if you go to wipi.org. All the information is there for you to see. And David, perhaps I can send you a link as well that maybe you can put at the end of the register registration link at the end of the podcast. David Spray: Yeah, please do that. And we also can put it in the email body itself that goes out to our email recipients and then in the show notes as well. Larry Drummond: Okay. David Spray: Well, Larry, thank you for your time. And like I said, I look forward to meeting you in person in a few weeks in Orlando. Larry Drummond: Okay. Look forward to seeing you. Thank you very much, David. David Spray: Thank you. There we have it. Another great episode. Thanks for listening in. If you want to continue the conversation, go to iciscshow.com. That's icy-d-icow.com. And we have additional information on the podcast, archived episodes, as well as a button to be a guest. So if you'd like to be a guest, go select that and fill out the information and we'd love to have you on the show. So that's it. We'll be back next time with another episode of The Icy Disc Show.
