Commercial pricing of precious metals

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nwinther

Active member
Joined
Apr 29, 2020
Messages
41
Not a techincal question, really, so posting here.

I like to buy commerative coins for myself, friends and family. I'm a poor fellow, so I buy silver coins, usually with a year, as in the year of the event I want to commemorate.

Anyway, when I look on websites at various companies around the world, something struck me today, looking at Perth Mint, that says the following on their site:

"Renowned globally, The Perth Mint is the place to buy 99.99% pure gold, 99.99% or 99.9% pure silver and 99.95% pure platinum in the form of bullion coins, minted bars and cast bars."

What caught my eye was the bolded numbers (my bolding). The reason is not so much the theoretically thousands fraction of purity, but the work that has to be put in to achieve that purity and how that (apparantly doesn't) affect prices.

I'm an avid viewer of Sreetips' videos on Youtube, and thus I realize the trouble he goes through from getting cement silver (he says about 96% pure) to 99,9 and eventually 99,99 or even 99,999 fine.
Now, I know industrial size operators have different profit brackets than a semiprofessional garage-refiner, but never the less, it must be more difficult - and expensive - to get a kg of 999 fine to 9999 fine. But when you look at their prices, this either doesn't trickle onto their pricing or they just treat it the same (so 999=9999 on the shelf).

So how difficult (expensive) do you think it is for an industrial operator to refine further? How much actual cost (not just the tiny fineness difference) is associated with bringing 98% silver to 999 compared to 9999 (Sreetips re-refines through his silver cell, meaning at least double time and power, but can you set it up differently somewhere so you get 999 in one operation and 9999 in a different operation (same feedstock) or would you possibly have two different types of feedstock where one yields 999 and another 9999 on first run?

I don't know where Perth Mint gets it's feedstock, but it's possible they buy scrap fine silver (999) at spot and give it a new refining getting 9999, whereas another feedstock (newly mined silver or maybe a less pure feedstock, maybe even sterling?), but where initial cost is similar, so the final result (999/9999) carries the same production expences and thus doesn't need actual price difference.

I know that a lot of other things goes into the final retail price that could drown out these differences, but since there's an extreme focus on purity, I'd expect it to play a pretty big part in the final pricing.
 
Remember that the sell price quoted is probably over spot and when they buy in they buy under spot but margins can be tight so volume is their way to profit, the cost of refining 1 kilo is probably not a lot less than 10 kilos or 20 kilos , also remember that they get bonus metals from some jobs that add up over time.
 
I would say very little extra cost as the purity is simply a product of a well designed process rather than extra work being carried out.

Streetips has made some good content in the past but clearly isn't very 'engineering minded' in my opinion. Although his setups generally work they rarely make any sense when viewed from an engineering perspective. They are not very time or financially inefficient. (He clearly makes his money from YouTube subs and sees more value in airing extra videos over improving his process)
 
Hey, Sreetips make high purity gold. People like that.

Insofar as the refining questions asked by OP...

Generally, an institution like the Perth Mint is going to get consistent feed materials (like dore) that they know how to process. It comes in, gets melted, gets sampled, gets fire assayed, then gets batched in a big furnace where it gets blown with chlorine. The impurities get bailed off and run for the silver content where any occluded or incidental gold ends up as a slime. Same thing with the scrubber/ESP/baghouse servicing that furnace.

The anode grade gold out of the miller process is probably 995-998. That's easily digested (or probably in their case, as I've never been to the Perth Mint) or electro refined to >99,99% wt basis gold.

Same with the silver. Gets melted, tramp gets burnt out to make an anode feed and then gets run through cell house.

Cost on refining is kind of a weird parabolic thing:
Most cost on least concentrated material taken to the highest purity. Most yield loss, and most expenditure of effort. Higher grade materials are more easily purified with less yield loss (or greater accountability).

Typically bulk gold refining is done for <1.75 USD/oz plus some accountability number (i.e. 99.75%). Silver is even cheaper.

PGMs are (much) more expensive as their unit operations are typically not quantitative and the chemistry more
 
I can't see the cost to refine 995 to 999 as being a paying proposition. If Silver is at $25.00 per Troy oz., to refine it further would require doing so at a cost of less than $.50 per oz.. I think I got my math correct, but am open to correction. 5/1000 =.02 x 25 = $.50. I can't see doing it, unless the volume is HUUGE, with a capitol U.
 
@Lou Thanks for the reply.

Since purity is so advertised, why not make ALL your (silver and gold) products 4x9, if the price isn't really that much different?

@speed Thanks for the reply.
I think he works with what he knows, first and foremost. Also, I find him rather paedagogical. More efficient processes can muddy the picture, I imagine (though some wouldn't).
And for whatever it's worth, his videos are by far the best out there, when it comes to learning how to begin refining something yourself.
 
Bulk silver electro refining is in the cents for PPOP (price per ounce processed) as it's basically electricity to melt it twice and plate it, along with waste water treatment and carried Ag electrolyte inventory. By bulk, I mean you are doing a couple mt/week (60-90K oz). I've done metric tons of silver but never done that much in a week. Electrolysis is still king, even though the ol' Republic Precious Metals were doing O2 pressure leaching (of which I'm an advocate for, mostly for electrolyte make up) at tonnage scale.

@nwinther Why not make it all 4N you ask? Well, usually it is. Most often 4N gold is better than 4N, most often 3N silver is better than 3N5. Cell gold is almost invariably 4N and change, or even 5N (i.e. Royal Canadian Mint) Same with solvent extracted gold like what comes from Penoles, Harmony, etc. The ol' inquart n'part is 995 min Au which is all that's expected in India or parts of the Middle East. We had a member here making 4N and adding copper to debase their gold.

Now silver is a little trickier, as a lot of mined silver has Se/Te/As that are annoying to remove. Most industrial users just agree on what impurities matter, which for silver, being more industrial-oriented, is usually based on its conductivity. So the ASTM has standards for gold, silver, platinum, palladium, etc.


Where overdelivering and underpromising gets less common is with oddball PGM stuff, like Os/Ir/Ru/Rh. For instance, when Ir was skyrocketing early last year, a lot of the stuff coming from S. Africa (sponge or precursor, ammonium hexachloroiridate) was not quite up to snuff compared to the usual. It was a mad dash to get it out the door, no one had any, and most of the contaminants are usually other PGMs or elements that "bake off" given the high temps to melt Ir. Since most of those metals get alloyed with platinum or palladium, there's a certain "so-what" factor and the lower grade stuff finds a home at some consumer making some alloy for some purpose where an extra 400 ppm of Rh is tolerable, which it almost always is.
 
Great topic. Thanks for sharing all this info, guys. Being a newbie, I'm clueless about many things. I bought my first coins last month. Having looked through The Hartford Gold Group reviews on this site, I decided to make the purchase there. Everything was ok, so maybe I'll address them again later. But again, I'm learning now, so who knows what decisions I'll make in the future. How can I improve my knowledge and skills? Should I just ask Google or are there good books/sources to read/check?
 
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