What is “value?” My dictionary has 13 definitions, but I’ll take the first one: “A fair or proper equivalent in money, commodities, etc., especially for something sold or exchanged.” Gold and silver are what my kids deal with, so I first checked the cost of mining gold and silver, and it’s obviously lower than the cost of the pure coins and bars going to you, but the process of getting it out of the ground and into your hands is unbelievable!
There are many things which go into the cost of anything, other than their cost of basic materials. It may actually cost but a few cents to make a loaf of bread, but the farms, bakery, maintenance, employees, transportation, taxes, licenses, and insurance in all sectors, and of course profit in all sectors, goes into making and selling a loaf of bread. All sellers of anything have to have a cost basis for their products, and as far as gold and silver, before the first ton of ore is extracted from the ground, many prospectors have trudged the mountains with pick and shovel, trying to find evidence of precious metals buried under the ground. Trying to find “That muck called gold,” has been the theme of countless western movies and novels, filmed and written over the last hundred plus years. In Colorado, there are hundreds of holes in mountains, with excavations piled beneath them, as evidence of another failure of a prospector to find gold or silver.
Ore with an ounce of gold, or two ounces of silver in a ton of ore dredged out of a mine, is considered a good find. Gold ore which is valuable, will not show any glitter in it. Fake gold, known as pyrite, has fooled many a prospector briefly, but if you see what looks like gold in an ore, maybe at a souvenir shop, it probably isn’t gold. If gold is visible in ore, it is called “High Grade,” and is very valuable, as opposed to 99.9% of common gold and silver ore. Ore to be turned into gold has to be first ‘milled.’ A gold mill, grinds the ore into almost face powder consistency, and the resultant powder is treated with centrifuges and chemicals such as cyanide. A gold mill is a huge edifice with enormous milling or grinding machines. There are two types of grinders in a mill. One is called a ‘ball mill,’ and is a large rotating enclosed bowl with large hardened steel balls in it. Ore is fed into it, and the steel balls tumble and crush the ore. Another is a ‘rod mill,’ which has steel rollers like an old washing machine wringer. This crushes the ore. All sorts of other components contained in a mill, are too complex to even describe, unless you have been through one. An intact gold mill, open for tours in summer, is in Silverton Colorado, owned and maintained by the local historical society. The mill at Silverton, has a mile long ‘tram line’ running between the mine and mill. The tram line transported miners to and from the mine and carried ore back to the mill. Miners rode to and from work in the tram line’s buckets, hundreds of feet above ground. Part of the mill is featured in a four-star western featuring Audie Murphy and Jimmy Stewart, titled “Night Passage,” and also features the steam powered narrow gauge railroad running between Durango and Silverton. Good show! If you ever go there, go through the mine tour also, and you will see the first stages of your gold coins. When the Silverton mill was built in the 1920’s, it cost hundreds of thousands of dollars to build, (many millions today), and required many dozens of workers, plus water, chemicals and electricity to operate. After the mill finishes pulverizing and treating the ore and has extracted the gold from it, the resulting waste is piled high like a rather large mountain near the mill, taken there by a conveyor belt. The mill ‘tailings’ are full of chemicals and will just sit there for eternity, they are so useless. The mill has produced what is known in the trade as ‘gold sponge.’
The ‘sponge, is then transported to another processing plant called a “smelter.” A smelter, is another large, expensive plant, which heats gold sponge to a temperature of 2150 degrees Fahrenheit, to further purify it to .999 or .9999 purity, making it useful for coins and bars. Both Gold Maple Leafs and Gold Eagles, have one ounce of gold in them. Gold Eagles weigh 1.09 ounces, because they have .09 ounce of alloy in them to make them hard and difficult to scratch or dent. Maple Leafs have no alloy, are soft, weigh exactly one ounce, and are .9999 pure. Smelters are illegal in the US, so ‘sponge’ is usually sent to Mexico for smelting, another huge expense. After smelting, the gold bars are sent to manufacturers, called ‘mints,’ where they are made into coins and bars. After minting, they are sent to distributors, who dispense the product to dealers around the world. We deal with A-Mark, and have for over forty years. They are the largest distributor in the world, and have offices all over Europe and in the US as well.
When you call David, Melissa, or Morgen, we buy from A-Mark, lock in the price, indicated by a ‘trade number,’ and when you pay us, we pay A-Mark, and order shipment to you, usually by insured UPS. Sometimes by U.S. mail. All of these procedures gets you, our customers, pure gold and silver at a mere few bucks per ounce over what a mine pays to get raw ore out of the ground. Efficiency par excellence. We make it even more efficient by not doing any advertising, not having employees, and working out of our individual homes with no office rent, managers, etc. You have pure money, which has been in existence for thousands of years, and desirable everywhere. It is real money, made from gold and silver. True value. – don@coloradogold.com