can someone explain how the mint's make a profit on bullion rounds

[gimmiethegold]

So when a company or distributor buys and sells bullion from the mint what price do they pay? Is it based on what the product sells to the end consumer for and the mint then bills the company on the price when it is sold? also who just saw silver go 22.94, 22.78 then 23.10 in less than an hour..

 

[errol43]

Yes silver is going up, down, up and down. 22.82 as I type.

2am AEST will be the test...This time has shown to be very
volatile in the past.

Regards Errol 43

 

[goldpelican]

Price risk is entirely on the retailer. Businesses buy at wholesale premiums, sell at retail premiums.

Contrary to popular belief, distributors don't get bullion at spot from mints.

 

[AG Hamster]

Price volatility is eliminated with hedging. Whatever they are long of in physical they are short in derivatives. That's why they don't sell bullion outside of financial market hours.
Profit is then made like any other manufacturing business on the production of physical.

 

[gimmiethegold]

So what does the mint pay for raw silver from 'producers' or is the produce all from buybacks etc?

 

[DanielM]

So what does the mint pay for raw silver from 'producers' or is the produce all from buybacks etc?

I heard that Perth mint buys big bars in 1 ton units(not 1ton bars that would be cool) from overseas.
Think, if they use buy backs then where did it come from in the first place?

 

[trew]

So what does the mint pay for raw silver from 'producers' or is the produce all from buybacks etc?

Well if they buy it in the actual spot market, so would pay spot.
But they would also have to pay shipping costs to get it to them.

I'd assume a direct transaction between mine and mint would be based around spot as well.

 

[trew]

I heard that Perth mint buys big bars in 1 ton units(not 1ton bars that would be cool) from overseas.

Bron has mentioned Perth Mint bringing in shipping containers full of silver before.

 

[Big A.D.]

So what does the mint pay for raw silver from 'producers' or is the produce all from buybacks etc?

The mint buys "dore" from miners (usually 80%-90% pure metal), refines it (for a fee) and figures out exactly how much gold or silver is there and then buys it from the miner at whatever their buy price is at the time the transaction is agreed on.

They also buy random scrap, coins and bars according to their current buy-sell prices. They have a price list on their website and the rates are partly calculated based on how much work they have to do in refining and re-manufacturing the metal.

The Perth Mint also trades on the London Bullion Market so if there is a big demand for, say, silver bars they'll buy huge 1000oz bars at the wholesale market spot price, ship them over to Perth and melt them down into smaller bars.

 

[bron suchecki]

The mint buys "dore" from miners (usually 80%-90% pure metal), refines it (for a fee) and figures out exactly how much gold or silver is there and then buys it from the miner at whatever their buy price is at the time the transaction is agreed on.

They also buy random scrap, coins and bars according to their current buy-sell prices. They have a price list on their website and the rates are partly calculated based on how much work they have to do in refining and re-manufacturing the metal.

The Perth Mint also trades on the London Bullion Market so if there is a big demand for, say, silver bars they'll buy huge 1000oz bars at the wholesale market spot price, ship them over to Perth and melt them down into smaller bars.

What that guy said. Buyback of scrap is a small part, most of the metal comes from mines. Note that every time we buy or sell we hedge by selling or buying in London, so we aren't exposed to price changes. Profit is made on the premium above spot and not on changes in the price of the metal.

 

[nicwinner]

i think because they get silver ore much cheaper than spot of pure silver

 

[volrathy]

they buy silver at $23 an oz spend $2 an oz turning it into coins and then sell those coins for $33 aka profit

 

[bron suchecki]

i think because they get silver ore much cheaper than spot of pure silver

You seriously think miners would sell their silver than less than spot? They have a hard enough time making money as it is.

 

[Shaddam IV]

i think because they get silver ore much cheaper than spot of pure silver

You seriously think miners would sell their silver than less than spot? They have a hard enough time making money as it is.

And yet some people think that they are getting ripped off if they are charged much over spot for minted rounds.

 

[Pirocco]

i think because they get silver ore much cheaper than spot of pure silver

You seriously think miners would sell their silver than less than spot? They have a hard enough time making money as it is.

Weird response, he didn't state that, he said that silver ore costs less than pure silver, and to me, that just sounds as logic, since silver ore is less pure and needs further processing to make it pure. So, if a Mint buys silver ore instead of pure, then that just means that the Mint itself is able to make it pure at a lower cost than the price to pay others for it.