from mining to investors pockets, how does it work?

konsole

Any and all information on the subject is appreciated. What I want to know is how the whole process works from the time the metals are mined to the time investors purchase the metals. For instance how many different parties generally handle the metal, who is setting the prices along the way, and what are some common factors that affect prices? Also if anyone has any info on what could be causing the current price increases that would be awesome too.

SilverEagles92

I saw a show about this on gold, it's really not that complicated of a process.

All from memory, don't hold me to it:

1) The ore is transferred on trucks from the mine to the refinery. The mine extracts the gold from the tons of rock in a process involving tumblers. They get something like 1oz of gold from 2 tons of rock.
2) Once the ore is removed from the rock, they melt it down to burn off impurities and shape it into bars. They make very large bars at the refineries.
3) After the bars are made, they are shipped off all around the world for different applications.

If you were making coins, for instance...

1) The US Mint sends its metal off to a factory (in Rhode Island, I believe) to make the planchets for their gold eagles. The factory takes the gold bars that came from the refinery and melts them down again. They produce an alloy of gold, silver, and copper. Copper to make the gold stronger, and silver to add to its brilliance.
2) The resulting slab of gold is thinned out in a press to the thickness of the planchet (a tad thicker, actually).
3) Planchets are stamped on a machine two at a time, and are packaged and shipped out to the mint.

At the mint...

1) The gold blanks are tallied, counted, and tallied again. As the director of numismatics once said, "It's our job not to lose metal."
2) They are taken to press operators, and fed one-by-one into the striking press. The coins are struck, and sent off to packaging.
3) The coins are packaged, and are ready for shipment to the customer!

Hope this helps!

blu62vette

I think it depends on the type mining. Gold nuggets to gold bars seems like an easy process. A huge vat of acid filled with a silt like material to concentrate the silver ore is a whole other beast......

Nysoto

Factors that affect mining costs: In the past few years energy costs have had the greatest imact on higher mining cost (check Barrick's website, the world's largest gold mining co.), also exploration, labor, and environmental costs.

Changing currency rates directly affect gold prices in US dollars, and much of the bull market (in USD) can be attributed to this.

On the open market, supply and demand sets the price. The largest physical buyer of gold is India for jewelry. Bullion coin production uses only a small percentage of gold production. While supply, demand, and exchange rates affect current prices, I think mining costs have an effect on long term average cost.

GoldenEyeNumismatics

<< <i>

1) The ore is transferred on trucks from the mine to the refinery. The mine extracts the gold from the tons of rock in a process involving tumblers. They get something like 1oz of gold from 2 tons of rock.
>>



Maybe I can come back and edit this post to give a more detailed sotry, but don't have the time right now... but I just want to point out that the amount of gold or silver obtained from each ton of ore relies on ore quality, and can vary vastly. Come mega-rich ores may yield 100 oz gold to the ton, while other might yield 1/100 oz to the ton.

Bear

To heck with the gold, what about the

chocolate bars?

BECOKA

<< <i>To heck with the gold, what about the

chocolate bars? >>



Shoot now youv'e done it. Now I have to go to the vending machine.

konsole

Great info guys. Only couple hours later and already onto page 3 of the US coins forums :-)

roadrunner

By leaving out all the financial games of stock shorts and longs as well as derivatives, carry trades, naked short selling, forward production hedging, power shortages, environmental and political shenanigans, etc....the story is pretty boring.

roadrunner

Gemineye

<< <i>By leaving out all the financial games of stock shorts and longs as well as derivatives, carry trades, naked short selling, forward production hedging, power shortages, environmental and political shenanigans, etc....the story is pretty boring.

roadrunner >>


The weight of paper out-weighs the metal....

adamlaneus

Gold also comes from non-gold mines. I visited a gigantic open pit copper mine in Arizona once; that state has got a few pits you would not believe.

I heard that they end up getting more silver and gold out of that ore than most silver and gold mines, simply due to sheer volume.

It's sort of like the old lead-silver mines in Cerro Gordo. It's the lead that paid the bills...the silver lined the pockets.

The small time hard rock gold mines i've seen creep me out. I cannot imagine working in such an environment.

BobSav

Here a place for all your answers about silver mining in the US.
Strange as it seems most silver these days is a by-product of some other mining operation.

http://en.wikipedia.org/wiki/Silver_mining_in_the_United_States

Bob

adamlaneus

One of my favorite stories is how Panamint City handled the security problem of sending raw metal through the middle of nowhere without law enforcement.

"Founded in 1873-74, the town grew to include many mills, saloons, stores, a red light district, a cemetery—all built along the uppermost end of Surprise Canyon. Panamint City was regarded as a "bad and wicked" town, with Death Valley at one end of town and the Panamint Range at the other end. Because of Panamint City's lawless reputation, Wells Fargo refused to open an office there. The senators solved the question of how to transport the silver bullion from the mines by casting it into 450 pound cannonballs, which were hauled to Los Angeles in an unguarded wagon."

And, I like the name...it literally means "Pan A Mint".

RWB

Most US silver production is a byproduct (...think 'beef and beef byproducts') of mining for other metals. Except for the Comstock and a small number of other "silver strikes," the US has never been a primary producer of silver.

BECOKA

<< <i>Here a place for all your answers about silver mining in the US.
Strange as it seems most silver these days is a by-product of some other mining operation.

http://en.wikipedia.org/wiki/Silver_mining_in_the_United_States

Bob >>

Linkified

YaHa

<< <i>To heck with the gold, what about the

chocolate bars? >>




I thought if Bears ate chocolate they would die or have poopy pains. Bear watch your chocolate intake because not many Bears left here on earth.

Bear

Poopy pains?