We had this discussion at work. What do you guys think. Does the mint buy gold and silver at a discount rate because they buy it in such big quantities.
I think they make deals right from the miners for a lot of their supply and hedge in the market just like any big PM dealer
They don't buy from the miners they buy from the refiners based on the client the refiners will sell to clients at prices lower than spot.
My guess would be that they do not get much of a discount as the planchets they use are of a very high quality and must meet all specifications within the parameters specified by the US Mint. They are after all a Gov't run agency so they're not gonna make anything easy and they just don't by from any Tom, Dick or Harry.
Why would they get a discount to the market? PM is not like going to a wholesaler and getting a price break on quantity. The price of PM is the price, and any purchases are predicated upon it. Now they may get a good deal on the cost of manufacturing the blanks for large quantities. The only discount to the PM price is: 1. Your PM is not pure and will have refining costs to make it pure. 2. The dealer needs to make a profit margin, and that profit margin is in part coming from you selling to him. Other than that, unless the dealer is sure the market is going down and wishes to move product quickly, I have never heard of a discount in PM.
Lol. Its usually the other way. If PM is up, the dealer tells you its hot and going up further if buying, he tells you its oversold and coming down when selling. Its weird how the market changes so quickly based upon whether you are buying or selling, huh?
The company I work is often telling us how they are able to negoitate a better deal on things from our suppliers, apparently PM's are not one of the things companies (The Government) is able to negotiate. Now............I'm wondering if that information is public info. I'm just curious as to how much profit is actually being made on an oz of gold or silver.
For new silver like the government would mint, I would assum they pay full price for the silver, plus a fee to make it a blank, plus their own fees. If you are talking what profit a dealer makes, he frequently pays under market for the coin. You can usually see it if he posts buy/sell prices. A dealer I know and like will post for junk silver "paying 21x, selling 23x face". You see his profit margin, (minus any kind of better coins he may skim off his purchases), right away. I don't begrudge him a cent of it, and I appreciate his honesty of posting his spread.
