Copper Bullion

I am trying to understand why copper bullion has been sell around $9.95 to $12.80 per pound. (One bar) However, wall street's current price for copper based on one pound is $3.80. Is over charge due to labor charge for creating copper bullion? What did I missing here? So far, silver bar has been selling at spot plus $2-$5 per pound. It does make sense, but not with copper.

 

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I think P.T. Barnum said it, "There's a sucker born every minute"

 

I have been working in copper mining for the last 12 years and do not understand how you make money from buying and selling copper bullion from an individual's prospective. You mine and process it cheaper than the selling price at large volumes. That is how you make money. How does copper bullion investors do it?

 

Kentucky: I agree. I would like to buy some copper bullions, but what they are selling in ebay and elsewhere. It's not worth to invest.

Derick: I wonder if you know where I can buy mined coppers? I am here in SLC, Utah as temporary job. I live only few miles from US largest copper mining and I don't mind to buy some bulk from them and save them, but can I do that? Also, there are silver mining in Park City near SLC.

 

We operate mostly in Chile and Aus. The best bet is negotiating buying reject cathodes from a leach plant at below spot. Arizona maybe?

 

I was wondering about melting down lots of pre 1982 cents, but I don't think that is legal.

 

Derick: Alright, I will asking some questions around here to see if I can buy some of it from copper mining.

Kentucky: It's still illegal to melt pre-1982 copper coins. Other threads in this forum has confirmed it. I guess we have to wait until congress sign an piece of paper allow us to melt it.

 

The overpriced "copper bullion" is always good for a laugh, I wouldn't even consider investing in industrial copper sheets.

 

Not exactly an industrial sheet, but something I ran into in a junk store.

 

Fun item for the Copper Kings. Did you buy it?

 

The way people make money from copper bullion is because they're buying a certain amount of bullion "units", they aren't actually receiving physical copper and they can never request to get any physical copper, it's just not their. They're buying numbers basically. Say they invest $1000 in copper bullion, they price of copper rises and they're stock is now worth $1,100. That person is not actually selling a bar of copper. That's how someone makes money off of copper bullion. The price of the bullion they're buying doesn't matter if it is anywhere near the melt value of copper because it's not relative to that, it's only relative to what the value will be if copper goes up or down. Very simplistic answer that I gave and doesn't fully explain how it works.

 

I have used JJC ( ETF) which is based on approx. 12X the price of copper/lb. Copper is currently down about 8 cents and JJC share is down 1.01. Conversely if it goes up 8 cents, so will the price go up about $1. JJC is well traded so the bid/ask price is usually only 1 cent apart. You CAN NOT take delivery, but you can own the shares as long as you wish. You have no delivery , acquistition cost ( beyond your brokerage fees) or storage fees. Options are available on this , but the bid/ask is large ( 60 cents -1.00) as it is more sparsely traded.

Jim

 

This may be a stupid question: What exactly is the difference in investing in the futures market compared to non physical holding ETFs?

 

When you invest in the futures market, you must have a broker who will process the orders for you. This requires a margin account, as you will be buying a contract basically on credit as it can go up or down before expiration, and they want protection if it goes down. If you buy a physical contract for delivery or decide to convert a non-delivery contract to delivery, the full amount for the delivery is due. ( Lots of copper and expense of delivery, etc.). If you don't go physical, you can sell the contract at or before expiration. Since there are usually about the same betting it will go down (puts) as going up ( calls) the gainers will equal the losers. Margin increase/decreases can change due to volatility , so one may have to give more to the broker to hold.

The ETF, you buy shares, which are priced slightly from the spot price of the underlying due to the ETF absorbing the fees of the exchange. You can buy them outright from a stock broker and hold up or down like the Futures, except with the futures there is an expiration date, the ETF stock, no. You can get options on the ETF and lower your amount paid due to leverage , which is good if the commodity goes up , and can lose all if the commodity goes down for a call option, and reverse for a put option. If one is sure about the future of a commodity, they can make a lot of money with little in, but most lose money in truth with any of these.

Jim

 

Thanks for the answer desertgem. So, futures are a limited all-or-nothing terminated speculation with need for additional cash in securities as a regulatory device (margin increase) compared to potentially greater leverage in options on the ETF with no(?) regulatory limit. -do I understand that right?

 

goldmark: Only reason why I am interesting in copper because gold and silver has reach premium price. It's difficult to buy bulk. I saw copper's price in wall street and I thought it's not bad idea and after check it out. Wow, they are over priced. I mean they weren't over priced by few dollars, but almost double to twice. That's why I want to get some feedback from this forum to find a way to buy bulk without paying more than wall street's price.

COINnoisseur: That's what I thought as they are pricing them based on "laboring" instead of metal value.

desertgem: Thank you for sharing on buying futures market or ETF. I will give it a look.

 

Even junk silver has an agio of 2-3% by now -not?

The discussion moved away from your original point by trending from physical investment (classic bullion hoarding in copper) to electronic investment/speculation which contains in my opinion the answer to the question how to do it.

Just in case I should have misunderstood something it was probably lost in translation.

 

I have been investing in copper pennies. I have about a $1000 worth of silver that I bought with the profits from my copper sales in the past year. Hoarding pennies is about the cheapest way I know of to invest in copper.

 

Nah, we are good. Yes, the junk silver is good deal, but it will cost about $500 per pound. It's little too high from my budget. $100 a month is my limit to spend and I may get only 1/4 pound of junk silver per month, but is it worth investment on small amount?

 

Yes, I have notice copper pennies are cheaper to buy, but they are filthy. Bullion bars are cleaner.