Does physical ever actually trade at spot?

Ashman

Ashman

Active Member
Silver Stacker
I've just started wondering when (if ever) within the cycle from miner to retail customer a physical metal actually trades at spot price.

Obviously raw gold is sold from the miner to a gold buyer who then sells to the refiner (assuming it's not some massive multinational mining company that does in-house refining.). So at what price does the raw gold trade between miner and buyer and between buyer and refiner? (I'm assuming it's probably some percentage of spot based on purity?). Then the refined gold will be sold to a mint (assuming the refiner is not a mint themselves), so does the mint purchase at spot price? (I'm assuming this is where spot comes in perhaps??). Then the mint will do their thing and obviously throw a couple of percent ontop, which is what I assume it will wholesale for. Then the retailer will chuck their bit ontop and that's what the end customer pays.

So for something like a 1oz gold bar that retails at 3% above spot, what percentage of that premium comes from each stage along the process?

Can anyone shed some light?
 
I have heard direct from a sydney dealer that they occasionally manage under spot on large orders
 
spannermonkey said:
Andy28 said:
Dealers can get under spot from some producers.
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:lol: :lol: :lol:

Only if you source direct from the miners
And good luck trying to do that
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miners perhaps not prospectors on the other hand
occasionally ;)
 
only retail gold buyers in malls regularly get gold seriously under spot :)
 
I think all miners (not prospectors) would sell directly to refiners, and have to in Australia to get GST back on their inputs. Mines sell to refiners at spot, but then pay a refining fee. You could argue that this means they are selling gold below spot, which is technically correct but if you want to argue that then no gold anywhere ever trades for spot because everyone's gotta pay the next person in the value chain for their service.
 
bron suchecki said:
I think all miners (not prospectors) would sell directly to refiners, and have to in Australia to get GST back on their inputs. Mines sell to refiners at spot, but then pay a refining fee. You could argue that this means they are selling gold below spot, which is technically correct but if you want to argue that then no gold anywhere ever trades for spot because everyone's gotta pay the next person in the value chain for their service.
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Thanks Bron.

So if the refiner buys at spot, but actually makes their money from the refining fee, does that mean the refined gold is sold to the mint at spot? So the premium comes entirely from the mint and the retailer?
 
Scrap Merchants pay 94% - 96% + (10% GST) = 104% - 106%
Refiners then pay between 97% - 99% + charge a fee
Refiners sell to dealers between 98% - 101% (more than 101% on some products and only under spot when they are overstocked)
Dealers sell to public 100% - 103% (will only get at 100% when they are overstocked and they got it cheap, more than 103% for Silver)

So if you want Gold at spot you would have to find a dealer overstocked and probably have to buy 1kg Gold bar size, or for Silver you would have to find a dealer overstocked and probably buy 10kg+ Silver bar size. Otherwise your always paying for the labour to make the bars and transport the bars.
 
Ashman said:
So if the refiner buys at spot, but actually makes their money from the refining fee, does that mean the refined gold is sold to the mint at spot? So the premium comes entirely from the mint and the retailer?
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Yes, mines basically pay to get the gold refined. After that all the costs is in the making and distribution of the bar/coin.

If you think about it, everyone is buying and selling at spot - everyone know what the gold price is and how much gold is in their item. If someone is buying at 98% of spot, what they are really doing is buying the metal in the item at spot and charging 2% fee to take your less than pure stuff to transform it. Same when they sell a coin, the metal is sold at spot and a fee is charged for the work done to it.
 
VANGBAC said:
AR 15 is crap well it used to be.
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Compare to what? HK-416 - absolutely. (Even though it's just an upgraded AR-15)
This talk is not encouraged here though.
As long as not many people understand what are we talking about though ...
 
C.H. said:
VANGBAC said:
AR 15 is crap well it used to be.
Click to expand...

Compare to what? HK-416 - absolutely. (Even though it's just an upgraded AR-15)
This talk is not encouraged here though.
As long as not many people understand what are we talking about though ...
Click to expand...

I just use a Kirby Sentria G10, I think its the best Vacuum and with an attachment I can have long enough range to get the ceiling fan. Is the AR-15 Bagless?
 
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