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Question: Why would someone purchase a 15 kilo copper bar for $320 when copper is only $2.86 LB. To what I know there2.2 LBS in a kilo now that 2.2 times 15 gives you 33 lbs. 33 times $2.86 = $94.38. Could you please explain, because to me its a huge rip off, thank you.
Answer: Thanks so much for the question and for visiting my site! As just about the biggest copper bullion evangelist out there, I have gotten this question more than once. As always, it's a real pleasure to answer it because I'm a big believer in the power of accumulating a position in physical copper bullion (whether it be bars, pennies, or scrap copper).
First and foremost, your numbers are absolutely correct. However, the spot price of copper you'requoting of $2.86, is basedonpaper contracts for delivery of tons of copper bullion. When you're not prepared to pay for and take delivery of tons of copperbullion, that spot price will quickly become a huge understatement of the real price of copper bullion. When you want to buy just a few pounds of copper, you're looking at substantially higher prices. Moreover, once you own physical copper bullion, make absolutely sure you never sell for the spot price of copper.Because it's hard to get investment grade copper in physical form, you've got something special on your hands and make sure to extract the full value when you're selling! (However, my personal opinion: Don't sell and hold for the long term.)
Second, copper is a tough metal to work with. It must undergo extreme temperatures to melt and it's quite the operation to refine it into a beautiful ingot. The copper ingots from Jetco and Tacoma copper are works of art that took substantial work to produce. These smaller copper bullion mints will definitely charge for their hard work refining the metal, as they should. Again, from the buyer's perspective, you're paying a bit more when you buy; When you sell, make sure to extract the full value of your beautiful ingots.
As you may know from my large focus on copper bullion, I'm a big fan of this metal. I view copper as agreat component of one's bullion portfolio in the range of 0% - 10% of your holdings. (I'm not an investment advisor and this is just my personal opinion, for entertainment only.) Within this component of your portfolio, there are definitely things you can do to keep your cost of copper down. I personally enjoy owning both copper ingots and also copper pennies. The beauty of copper pennies is you can hoard them for their face value. If you pay a bit more for copper ingots, the pennies help bring your cost basis back down while owning a diversified copper bullion portfolio.
Moreover, I'm super excited about recent trends in owning physical copper bullion that make it easier to keep your cost basis down. The Copper Cave recently started offering 10 pound bags of copper chops for only $49.95. This is a super way to own copper bullion for a substantially lower premium over spot. I highly recommend this option for small and large copper investors alike. Also, I recently discovered The Portland Mint. I'm super impressed with this awesome way of buying large quantities of physical copper bullion. They can either deliver your bullion or store it for you. Again, another interesting way to own copper close to the spot price. Longer term, I expect this trend to continue. It's awesome to see the innovation in the industry towards reducing the spread between spot and the price small investors pay for smaller quantities of bullion. One thing is for sure: Copper bullion is one of the most exciting and fastest evolving areas within metals, period! I can't get enough of this niche and enjoy buying all of the different copper flavors.