What do private mints pay for silver planchets?

FellintoOblivion

Judging by the fact I can find rounds for "[O]nly $0.79 per oz over spot!", I can get free shipping by buying as few as 6 of them and the averaged cost of the design they commissioned for them is down to fractions of a penny per round after they mint enough of them I figure they can't be buying blanks for more then a few pennies over spot.

Do the larger private mints buy raw silver and make their own?

djm

Mostly they buy scrap silver and make their own planchets. They melt the silver, roll it out into sheets, and bars and punch out planchets and strike the round. They pay far less than spot for the silver.

FellintoOblivion

@djm said:
Mostly they buy scrap silver and make their own planchets. They melt the silver, roll it out into sheets, and bars and punch out planchets and strike the round. They pay far less than spot for the silver.

What about a place like Sunshine Minting that provides planchets to the US Mint? Surely they aren't getting all their material from scrap.

I wonder what % of mined silver goes towards making coins/bullion.

djm

I thought you meant places like SilverTowne that are not a mining company.

BAJJERFAN

@FellintoOblivion said:

@djm said:
Mostly they buy scrap silver and make their own planchets. They melt the silver, roll it out into sheets, and bars and punch out planchets and strike the round. They pay far less than spot for the silver.

What about a place like Sunshine Minting that provides planchets to the US Mint? Surely they aren't getting all their material from scrap.

I wonder what % of mined silver goes towards making coins/bullion.

I believe they buy 1,000 ounce bars. I expect that they require a minimum purity. There should be videos out there.

ricko

That raises a question in my mind... what price do the silver mines sell at?? Never thought of that before....Cheers, RickO

CaptHenway

@djm said:
Mostly they buy scrap silver and make their own planchets. They melt the silver, roll it out into sheets, and bars and punch out planchets and strike the round. They pay far less than spot for the silver.

Yes, but their pricing has to take into consideration that at times they will be selling more planchets than they are buying in scrap, and will have to buy physical silver to process.

Cameonut

I used to be involved in procuring and recycling precious metals for catalytic converters for a major worldwide auto company. Mostly on the technical side, but was aware of the commercial side. Think hundreds of $ millions per year.

If we assume that large consumers of metals will do similar things, I would surmise that large silver users will negotiate directly with the mines to eliminate the markups by the middlemen. They will negotiate the form in which the product will be delivered, clearly the more processing required, the higher the price. These negotiations normally define the volumes of material required and the price. The price was ALWAYS well below the spot market pricing. Why is that? Because the mines want big customers to commit to future volume which keeps the mine and associated processes in business with no fear of market downturns.

Pricing is always held close to the vest for obvious reasons.

So if you are a big fish - you have some leverage on below-spot pricing.

If you are a small fry - you are stuck procuring based on spot.

cohodk

Futures market.

derryb

@cohodk said:
Futures market.

COMEX now selling planchet promises?