Hilary is breaking down why the cost of sterling silver wire is higher than the daily silver market price everyone sees. There are a few factors that go into the price of this versatile supply.
We hear the daily silver price on the news each morning, today it was $27.92 per ounce. Yet sterling silver wire today is priced at $33.62 to $31.90 per ounce depending on the total ounces purchased. Occasionally we have a customer ask this question. After all, sterling is only .925 pure silver so it is a reasonable assumption that milled metals should cost 92.5% of the daily spot price. This is logical thinking but there are actually several reasons why it is not the case.
1. Market quotes are for traders
Market quotes in the news are a base rate in the marketplace for commodity traders and banks dealing in large volumes of metal. Even if you buy a bullion bar of gold or silver, the most basic metal exchange form available, you will still pay a percentage over the market because you are buying a relatively small quantity of metal. When you start dealing in thousands of ounces you get closer to quoted market rates on transactions.
2. Wire is not bullion
While wire and sheet are indeed raw materials, they are still processed metals that have gone through refining and manufacturing. There is value in the form of jewelry wire and sheet due to these procedures and the assurance of quality in the metal alloy. Those labor components add to the price of the metal.
Metal refining and manufacturing facilities are impressive factories full of huge smelting furnaces, drawing equipment, annealing ovens and much, much more. It takes a major capital investment to handle precious metals on a large scale. These investments must be paid through the sale of metal materials
Metals spot prices you hear in the news are for commodity traders dealing in paper contracts of quantities of metal. These prices do not include quantity break down and delivery to any specific location. The cost of moving metals from the mines through production facilities and out to distribution locations is a cost component as well.
Pricing on sterling silver materials for small scale manufacturers is comparable to pricing on many other commodity goods. Even if you run a restaurant you will not pay the daily spot exchange price for corn. And even if you run a fleet of delivery trucks you will not pay the daily fuel price for a barrel of crude oil. Getting milled metals from the mines to jewelry artists involves companies at several levels from the mine to the mill to the distributor and finally to the jewelry studio.
Halstead is one of North America's leading distributors of quality jewelry supplies. The firm is celebrating its 46th anniversary this year. Halstead specializes in wholesale findings, chain, and metals for jewelry artists.