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Thread: The difference between "Spot" price and "Melt" value

  1. #1
    Join Date
    Aug 2007
    Posts
    403

    Default The difference between "Spot" price and "Melt" value

    Post by "AGRO" on the GIM forum. IMO well worth passing on. Thanks AGRO!

    "Evening,

    I remember a while back people asking "what the difference is between spot price and melt price." Also "why does one product say over spot and one over melt but it is the same?"

    There is a BIG difference and I will try to explain the best I can.

    SPOT price is the spread between the bid and ask prices set in the market you are dealing in for that region by the commodities trade of the given metal, for that trading day.

    There are always 2 spot prices.
    BID= if you are selling metal to a dealer, this is the price at which the market dictates what the given value is at that minute or at close of day trading for your region (internationnaly.) A dealer or individual will "buy/pay" for your PMs. "I'll pay spot for Engelhard and 95% on "Generic Silver."

    Simply, APMEX will pay you "bid" price if you sell them PMs... once the price is locked in.

    ASK= The price at which the market dictates metals are sold. You or a dealer start your "base" price for selling metal at spot "ask," PLUS premiums.
    Hence, .99 Over Spot!

    MELT: Value is the median price at which a "refiner/s" will pay you for your metals. The reason why "dealers" may say "over melt" is because they are claiming that their refiner or refiners will pay them/you the same "melt" value for said metals, LESS premiums.

    Also, if you were to take your metals to a refiner the "melt" value will often be less than the base "over melt" by a dealer.

    Simple BreakDown:
    Hence,
    METAL XYZ= 1/ t-oz = 1.00 Market "ASK" For instance COMEX metals trade at spot "bid and "ask."
    METAL XYZ= 1/ t-oz = 1.00 Market "ASK" + .99 over SPOT = Final PR 1.99
    METAL XYZ= 1/ t-oz = 1.10 Market "ASK" + .89 over MELT = Final PR 1.99

    Same price right??? Yet, less "premium" (could be reversed) on the "over Melt" items... "Melt" will vary between refiners. It, as far as I am concerned is not an accurate way to judge the charged premium via big online dealer. Real "melt" is when you walk into a refiner to sell. In some cases this price will be better than selling to your favorite "local."

    Hope this clarifies a bit,
    AGRO-"

  2. #2
    Join Date
    Apr 2009
    Posts
    459

    Default

    Quote Originally Posted by goldminer View Post
    Post by "AGRO" on the GIM forum. IMO well worth passing on. Thanks AGRO!

    "Evening,

    I remember a while back people asking "what the difference is between spot price and melt price." Also "why does one product say over spot and one over melt but it is the same?"

    There is a BIG difference and I will try to explain the best I can.

    SPOT price is the spread between the bid and ask prices set in the market you are dealing in for that region by the commodities trade of the given metal, for that trading day.

    There are always 2 spot prices.
    BID= if you are selling metal to a dealer, this is the price at which the market dictates what the given value is at that minute or at close of day trading for your region (internationnaly.) A dealer or individual will "buy/pay" for your PMs. "I'll pay spot for Engelhard and 95% on "Generic Silver."

    Simply, APMEX will pay you "bid" price if you sell them PMs... once the price is locked in.

    ASK= The price at which the market dictates metals are sold. You or a dealer start your "base" price for selling metal at spot "ask," PLUS premiums.
    Hence, .99 Over Spot!

    MELT: Value is the median price at which a "refiner/s" will pay you for your metals. The reason why "dealers" may say "over melt" is because they are claiming that their refiner or refiners will pay them/you the same "melt" value for said metals, LESS premiums.

    Also, if you were to take your metals to a refiner the "melt" value will often be less than the base "over melt" by a dealer.

    Simple BreakDown:
    Hence,
    METAL XYZ= 1/ t-oz = 1.00 Market "ASK" For instance COMEX metals trade at spot "bid and "ask."
    METAL XYZ= 1/ t-oz = 1.00 Market "ASK" + .99 over SPOT = Final PR 1.99
    METAL XYZ= 1/ t-oz = 1.10 Market "ASK" + .89 over MELT = Final PR 1.99

    Same price right??? Yet, less "premium" (could be reversed) on the "over Melt" items... "Melt" will vary between refiners. It, as far as I am concerned is not an accurate way to judge the charged premium via big online dealer. Real "melt" is when you walk into a refiner to sell. In some cases this price will be better than selling to your favorite "local."

    Hope this clarifies a bit,
    AGRO-"
    I always wondered this .Thank you very much for posting this very informative
    "I know where Daddy keeps his Silver Shhhhhh"(I loves my precious hehehe)

  3. #3
    Join Date
    Dec 2008
    Location
    Zionot, Squashkenazi
    Posts
    10,460

    Post The current melt value of $1 in 90% fractional is ~$21.12 versus ~$22.58 in a dollar.

    I expect the melt value of fractionals to go to 100x face in short order.

    Think $25 a gallon gas.

    Bo dollars should fetch a nice premium.
    "I foresee little future in 'the price of silver', I see a huge future for 'the price in silver'." - heartbone
    "The truth is called hate by those who hate the truth." - K

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