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twocents
Penny Collector Member
398 Posts |
 Posted - 09/13/2009 : 15:39:40
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I would appreciate some guidance as to why copper bullion bars and ingots are so expensive. Seems to me that they regularly post for about 10 X melt value. I do understand there is cost for fabrication, but how can one justify paying such high prices? Is the shine worth that much? One would certainly be better buying PMs at a markedly lower mark-up. Am I missing something here
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Just my two cents! |
Edited by - twocents on 09/13/2009 15:40:29 |
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natsb88
Administrator
USA
1850 Posts |
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twocents
Penny Collector Member
398 Posts |
Posted - 09/13/2009 : 16:07:41
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Thanks for your response, Nats.
Please help me with the math. I see the premium over spot as being about $1.60 per ounce over spot for copper. Also, premium must be compared in the terms of being a ratio to the actual cost of an ounce of the metal, not on an absolute dollar per dollar scale. A $60 premium on an ounce of gold is only a 6% mark-up. A $4 premium on an ounce of silver is a 25% mark-up. A $1.60 markup on an ounce of copper is about an 800% mark-up. I just don't see these copper bars as ever being numismatic. I would think in the endgame, the buyer is going to be an industrialist, not a shiny copper bullion collector. Are you suggesting that the bars are for the collector. Any one buying up copper for the purposes of taking a position in copper would naturally go for copper pennies, no? Nats, I am not trying to attack you here. I am just trying to understand, why. I did look at your site, and the copper you sell looks great. I just can't come up with a reason as to why it would be a good buy for me. If my logic is wrong, please feel free to correct me. |
Just my two cents! |
Edited by - twocents on 09/13/2009 16:48:26 |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 09/13/2009 : 17:07:00
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I will admit to having a few bars in the hoard. Some of them purchased from Nate, who is a great guy to do business with. I bought them more for the novelty and because I thought they looked cool. I knew exactly how much premium I was paying. Obviously I agree with you about the copper pennies (which can currently be purchased below melt) for one's position in copper. There is also the side benefit of a numismatic play on the pennies.  |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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natsb88
Administrator
USA
1850 Posts |
 Posted - 09/13/2009 : 17:51:08
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quote:
Originally posted by twocents
Please help me with the math. I see the premium over spot as being about $1.60 per ounce over spot for copper. Also, premium must be compared in the terms of being a ratio to the actual cost of an ounce of the metal, not on an absolute dollar per dollar scale. A $60 premium on an ounce of gold is only a 6% mark-up. A $4 premium on an ounce of silver is a 25% mark-up. A $1.60 markup on an ounce of copper is about an 800% mark-up.
The 'premium' varies widely depending on the product. I have bars that sell for $17.95/kilo, which is less than $0.70 per ounce over spot. As a percentage of the paper price that is still a large premium, but there is no way to get around the expenses associated with handling and processing the material. As an example, it costs the same to strike a coin regardless of whether it is silver or copper, and ultimately that cost is a large component of the final retail price.
quote:
Originally posted by twocents
I just don't see these copper bars as ever being numismatic. I would think in the endgame, the buyer is going to be an industrialist, not a shiny copper bullion collector.
That's one thing I don't particularly agree with. I don't plan to sell my silver bars or gold coins to a refinery, so why sell my copper bars to a scrap yard or industrial user? Sell them to another collector or even to a dealer, just like you would with other PMs. Since physical copper as an investment is a very young market, reselling right now can be somewhat problematic. Forums like this and eBay are about the only places to sell or swap at the moment. However most people look at PMs as long-term investments or stores of value, and I believe copper should be treated the same way. I expect it to become much more popular over the next few years. My sales for the last six weeks this year have increased 105% over the same period last year. I know at least one of my suppliers is working with a local coin dealer to sell copper at his store. I only see these trends increasing as time goes on.
quote:
Originally posted by twocents
Any one buying up copper for the purposes of taking a position in copper would naturally go for copper pennies, no?
Yes, as long as they are not concerned about the melt ban or the purity (both of which work against selling to an industrial user). Pennies and fabricated bars are sort of two different beasts in terms of relation to spot price. Because of the premium associated with making them, bars tend to be less affected by small changes in the spot price, which means they are slower to increase in value, but more stable. The price of copper pennies, in theory, moves more closely with the spot price. However pennies are still selling for way below spot here and on eBay, so the excess of supply is limiting their short term upside. I think a good copper portfolio strikes a balance, having a large component of bulk cheap copper (pennies), and a smaller component of .999 bars and rounds with some collectible appeal. This is along the same line as saving bulk 90% silver coins or generic .999 rounds, with a few Morgans or some nice numismatic pieces in the mix as well.
A compromise is to hoard #1 copper chops. You get the benefit of .999 purity and no law against melting at much closer to spot than fabricated bars. If your exit strategy is to sell to an industrial user rather than another collector or dealer, then they are a good directly consumable option. The downside is that you usually have to buy in very large quantities (tons at a time). I just started stocking 10-pound bags of #1 chops; I'm interested to see how they sell over the next few months.
quote:
Originally posted by twocents
Nats, I am not trying to attack you here. I am just trying to understand, why. I did look at your site, and the copper you sell looks great. I just can't come up with a reason as to why it would be a good buy for me. If my logic is wrong, please feel free to correct me.
No offense taken. This is a very common question and debate. Your logic as far as bullion bars and rounds being much more expensive than pennies is certainly true. The prices don't lie. Your exit strategy of selling to an industrial user is where I have a differing opinion.
This might open up another whole debate, but here's something to ponder. Pennies are selling regularly on this forum for 1.3 - 1.4x face, which is 25% - 30% under spot. Fabricated and poured .999 bars and rounds are selling on my website, numerous individual maker and mint websites, eBay and other auction sites, and even a few forums, for 400% - 800% over spot. Is this a trend that will continue? Unless somebody develops a revolutionary new way to process raw copper into .999 fine solid bars and ingots, I suspect fabrication costs have nowhere to go but up, which means bars will only continue to increase in price. |
Nate
The Copper Cave
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twocents
Penny Collector Member
398 Posts |
Posted - 09/13/2009 : 18:13:04
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| Nats, again, thanks for the commentary. Of course one would not sell a nice bullion bar to the smelter for spot price. I was not trying to imply this would be the case. I am more of the opinion that there is unlikely going to be sufficient demand for premium bullion copper bars to justify a steady market and ease of liquidity once more and more bars are made. I ultimately see premiums coming in substantially if these become popular. Thus there is tremendous downside risk in the premiums were one to try to accumulate any quantity of these bars as anything more than a novelty small position. 90% monetary silver is completely different, and I don't think you can so readily compare your copper products to it. 90% monetary silver can no longer be produced in its current form. Much of it has already been melted. Much of what remains is held is very large quantities by the big players. Should a small player want to say invest $1200 in silver, one could buy $100 face with limited downside and not a great deal of premium risk. There would be extraordinary premium risk investing the same amount in copper bars, which are destined to not be rare and are infinitely reproducable as they are not legal currency. |
Just my two cents! |
Edited by - twocents on 09/13/2009 18:28:39 |
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twocents
Penny Collector Member
398 Posts |
Posted - 09/13/2009 : 18:34:10
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[/quote]
The 'premium' varies widely depending on the product. I have bars that sell for $17.95/kilo, which is less than $0.70 per ounce over spot. As a percentage of the paper price that is still a large premium, but there is no way to get around the expenses associated with handling and processing the material. As an example, it costs the same to strike a coin regardless of whether it is silver or copper, and ultimately that cost is a large component of the final retail price.
[/quote]
I do see that I am unfairly weighing (no pun intended) your most expensive bar to make my point. I was not aware that you had bars at $17.95/kilogram. |
Just my two cents! |
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natsb88
Administrator
USA
1850 Posts |
Posted - 09/13/2009 : 19:17:49
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quote:
Originally posted by twocents
Nats, again, thanks for the commentary. Of course one would not sell a nice bullion bar to the smelter for spot price. I was not trying to imply this would be the case. I am more of the opinion that there is unlikely going to be sufficient demand for premium bullion copper bars to justify a steady market and ease of liquidity once more and more bars are made. I ultimately see premiums coming in substantially if these become popular. Thus there is tremendous downside risk in the premiums were one to try to accumulate any quantity of these bars as anything more than a novelty small position. 90% monetary silver is completely different, and I don't think you can so readily compare your copper products to it. 90% monetary silver can no longer be produced in its current form. Much of it has already been melted. Much of what remains is held is very large quantities by the big players. Should a small player want to say invest $1200 in silver, one could by $100 face with limited downside and not a great deal of premium risk. There would be extraordinary premium risk investing the same amount in copper bars, which are destined to not be rare and are infinitely reproducable as they are not legal currency.
I was not comparing 90% silver coins to copper bars. I was drawing a comparison between diversity in silver holdings and diversity in copper holdings. 90% silver coins or generic .999 rounds are to silver what pre-82 pennies are to copper. Numismatic silver or proof rounds are to silver what nicely fabricated bullion bars are to copper. Most people don't stack Proof SAEs for bullion value, but might have a few as they expect the value to hold or go up. In my opinion, the same can be said for copper bars. The bulk of most physical holdings will be pennies, but there is room for a few shiny pieces in any hoard as well.
Prices may come down slightly on copper bars in the short term, but as I mentioned in my previous post, the production costs are not going to drop significantly unless there is some sort of radical development in copper processing. As long as the production costs exist, the premium on .999 bars will be there. I actually expect production costs to increase, as energy costs are on the rise and refining and fabricating copper is typically an energy-intensive process. Nobody is going to manufacture new bars and sell them at a loss. As more bars are made the prices could drop slightly, as there is a relatively small market for bars right now and production could outpace demand. However, a small market now means it can only expand in the future.
To look at it from a completely different angle... There are lots of people holding gold and silver. There are fewer, but still many people sorting and holding copper cents. There is nobody else doing what I'm doing with base metal bullion sales. That either means I'm completely crazy , or I'm in a good position at the foundation of a completely new market. My sales stats thus far point to the latter. Any significant drops in the price of copper bars (new or on the secondary market) would be terrible for my business, and I would not have invested significant amounts of my own hard-earned money in this business if I did not have confidence in the market. |
Nate
The Copper Cave
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 09/13/2009 : 22:06:45
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| Getting a copper bullion catagory on ebay was a good step in the right direction for the new and resale market. Also by bringing the copper pennies alongside copper bars I hope to bring up the prices and respect for copper pennies. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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biglouddrunk
Penny Pincher Member
138 Posts |
Posted - 09/14/2009 : 00:30:36
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| Has anybody here ever bought copper from there local industrial metal seller? In my previous job I recall buy copper in 500# barrels. We paid a little higher than spot for plating grade copper. |
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Cupronickel
Penny Pincher Member
USA
110 Posts |
Posted - 09/14/2009 : 19:37:11
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quote:
Originally posted by biglouddrunk
Has anybody here ever bought copper from there local industrial metal seller? In my previous job I recall buy copper in 500# barrels. We paid a little higher than spot for plating grade copper.
I've bought #1 Cu chops from a local metals processor. I piggyback my orders (20-30 lbs) along with what I buy for my company (1000 lbs). I get the same price, but don't know if that would hold, walking in off the street. I would guess that the price would still be reasonable, if you provided your own container.
I find this the most cost effective method of acquiring copper. |
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PreservingThePast
1000+ Penny Miser Member
USA
1572 Posts |
Posted - 09/14/2009 : 19:40:14
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Twocents...I have bullion from The Copper Cave and I would consider it to be artwork and a definite collectible item.
That just my opinion, however.
Enjoy. |
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twocents
Penny Collector Member
398 Posts |
Posted - 09/14/2009 : 20:09:08
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| Thanks for the commentary, everyone. I believe I am more of a scrap/wholesale copper investor. Nate, when I am in the mood for a nice bar or two, I will certainly look your way. I apreciate your time and response. |
Just my two cents! |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 09/14/2009 : 20:31:10
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Nate,
Take one of those bars I ordered 20 of on my current order and send it to twocents as a gift. Just add the shipping cost to my bill. Don't tell him how much the mark-up is. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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twocents
Penny Collector Member
398 Posts |
Posted - 09/14/2009 : 21:37:28
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quote:
Originally posted by HoardCopperByTheTon
Nate,
Take one of those bars I ordered 20 of on my current order and send it to twocents as a gift. Just add the shipping cost to my bill. Don't tell him how much the mark-up is.
I am flattered. Nate says this should be good for a laugh. I guess I'll have to reciprocate with a good deal on those log cabins we have been talking about. Nate, if you are in the business of making bars, it would be funny to mint some HCBTT copper bullion bars with a wet cat emblem (or dog)? I would imagine they would be popular. |
Just my two cents! |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 09/14/2009 : 22:35:49
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| I call the Icon a SniperCat.. from when I used to manually snipe on eBay.. before all the automated sniper programs. I actually had a few "perfect" snipes.. 0 seconds left on the clock. That icon will certainly never be confused with anyone else's. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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n/a
deleted
4 Posts |
Posted - 09/19/2009 : 07:23:28
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| I have a friend who does coin shows with me and he sells copper bars with great looking designs on them. people are buying them based on looks rather than copper value..sometimes it gets down to eye appeal just like buying a coin..you can get a good price if the design is right...bigdoug |
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2old
Penny Pincher Member
188 Posts |
Posted - 09/19/2009 : 09:53:45
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quote:
Originally posted by Cupronickel
quote:
Originally posted by biglouddrunk
Has anybody here ever bought copper from there local industrial metal seller? In my previous job I recall buy copper in 500# barrels. We paid a little higher than spot for plating grade copper.
I've bought #1 Cu chops from a local metals processor. I piggyback my orders (20-30 lbs) along with what I buy for my company (1000 lbs). I get the same price, but don't know if that would hold, walking in off the street. I would guess that the price would still be reasonable, if you provided your own container.
I find this the most cost effective method of acquiring copper.
Can you share with me what your company pays for #1 copper chops. We have that in 2,300 lb lots. Can get any amount needed up to about 1 million pounds. Will sell, trade, barter.
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Everyone wants to go to Heaven, nobody wants to die. |
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Cupronickel
Penny Pincher Member
USA
110 Posts |
Posted - 09/19/2009 : 20:52:09
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IIRC, it's about $0.20/lb over LME price. The great thing I have with my supplier, is that I can buy any quantity and I can pickup local with our truck (no freight costs). That means I don't have to hold anymore inventory than I have to! Been doing biz with this company for 15 years. I've sent 4 barrels back due to brass contamination, or oily material, not bad for that span of time.
quote:
Originally posted by 2old
quote:
Originally posted by Cupronickel
quote:
Originally posted by biglouddrunk
Has anybody here ever bought copper from there local industrial metal seller? In my previous job I recall buy copper in 500# barrels. We paid a little higher than spot for plating grade copper.
I've bought #1 Cu chops from a local metals processor. I piggyback my orders (20-30 lbs) along with what I buy for my company (1000 lbs). I get the same price, but don't know if that would hold, walking in off the street. I would guess that the price would still be reasonable, if you provided your own container.
I find this the most cost effective method of acquiring copper.
Can you share with me what your company pays for #1 copper chops. We have that in 2,300 lb lots. Can get any amount needed up to about 1 million pounds. Will sell, trade, barter.
____________________
Everyone wants to go to Heaven, nobody wants to die.
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2old
Penny Pincher Member
188 Posts |
Posted - 09/20/2009 : 11:44:49
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| Thats interesting, thank you. You have a great connection there. |
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 09/20/2009 : 21:02:20
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| don't take this the wrong way, but why go to the trouble to make bullion bars when you can buy pure copper pipe or tubing? |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 09/21/2009 : 08:28:47
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twocents.. Glad you and PreservingThePast got your bars. Hope you don't mind that hers was quite a bit bigger than yours. We wanted to start you off small with the 1 gram Buffalo bar.
LemonThrower.. I have copper pipe, tubing, and even solid copper rod in my hoard, as well as a few pennies.. but the bars are artwork. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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2old
Penny Pincher Member
188 Posts |
Posted - 09/21/2009 : 08:30:55
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| Hello Lemon Thrower. Personally, I would rather keep or sell #1 copper chips, but they do not seem that popular. Bullion bars seem much more popular with the public and more profitable to sell. |
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Why is Copper Bullion so Expensive?
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