When shopping for bullion, it’s pretty easy to determine the premium of the specific item you’re looking at. The premium is the amount at which something is valued in addition to that particular bullion’s spot price. These costs are a result of numerous factors which are primarily demand driven and vary on a per product basis.
To calculate a premium, take the asking price of the product you are shopping and divide by the current spot price of the metal. Subtracting 1 from the number you arrive at will give you that products premium. If the silver spot price was $32.50 and the silver round you were interested in costs $34.25 for example, you would find that product had a 5% premium by using this math: 34.25 / 32.50 = 1.05
At Provident, we take pride in offering some of the lowest premiums you’ll find on the ‘net
It’s tough to nail down a standard premium a customer can expect on bullion products because no two coins or bars have the same demand or production cost.
Copper is a great example, the production costs are much higher on copper bullion products. Calculating the premium on copper or any bullion product is however, a great way to measure one dealer or product against another, or determine the products “bang for your buck” factor.
The process of differentiating bullion products by premium translates into bullion types. Like gold and silver for example, copper represents a real asset with ‘intrinsic’ value that will appreciate in times of massive inflation.
The true value of copper bullion though lies in not only investment speculation, but also bartering potential. Many investors find value in how easily monetized copper will be in a crisis and find excitement in its potential upside and affordability.
Copper is so much cheaper in terms of the base price because it’s so much more common in the Earth – so common in fact that humans could pick it up off the ground thousands of years ago.
The higher premiums for copper bullion products are certainly noticeable – so why’s it so high?
The answer lies in the processing.
First, copper doesn’t melt down as easily as gold and silver. A much more extensive process is required to extract copper. Since copper oxidizes much more easily under heat, special techniques or chemicals are required to produce pure copper with no bubbles or contaminants in it.
Unless you’re trading multiple tons each month, it’s impossible to buy copper at a low premium.
Considering further processing, sizing, engraving and shipping, it’s easy to see how copper coins can have such a high premium.
Although copper is technically an industrial metal, it’s increasingly moving into the bullion category. Surely as copper coins and bars gain in popularity, those premiums may come down.
If you’re looking for a low-cost option for barter coins (…in addition to the traditional 90% junk silver), consider copper coins.
