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Platinum Group Metals and Coin Trading

December 9, 2016

Chapter 38 in the exclusive series for Dynamic Commodities- becoming a commodities trader

My colleague, Rafe Pirutinsky took over as the coin dealer before Ray’s departure from the company. Rafe was responsible for a business that bought new issues of coins from government mints around the world and sold them to the retail coin dealers. Philipp Brothers, as a global precious metals dealer, was one of the few companies allowed to participate in government mint auctions of coins. The price of the coin had two components. The metal value or gold, silver or another precious metal was the easy part. The premium or discount to the market price was more tricky.

The premium or discount depended on supply and demand for the coins in the wholesale and retail markets. In the case of a new issue where there was lots of demand, Rafe would offer the mint a high premium to compete with other dealers. The mint sold to the highest bidder at auction time. In the case of an issue with a weak demand, Rafe would still have to try to beat the other bids in the market to secure supplies for Philipp Brothers. When Rafe won an auction, he would sell futures contracts to hedge the value of precious metals content. He then used the company’s contacts to market the coins at a higher premium than he paid to the mint.

Trader Ron Strauss ran the business of the platinum group metals. This was a group of rare precious and industrial metals. While platinum and palladium futures traded on the New York Mercantile Exchange, the contracts were not liquid when compared with gold and silver. Ron also traded in rarer platinum group metals such as rhodium, iridium, osmium and ruthenium. All of these had no exchange contracts because of the limited scope of the markets. Platinum group metals’ trading was more of a traditional Philipp Brothers commodity merchanting business. Ron would attempt to buy the platinum group metals at low prices from producers. His then tries to sell them to consumers at a profit.

Coins and platinum group metals were sideline businesses in the precious metals department. Gold and silver were the big money markets. However, options’ trading was growing. The profits from Sid Gold’s desk were starting to pile up. That was where I was heading.

Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities

Trader Ron Strauss ran the business of the platinum group metals. This was a group of rare precious and industrial metals.

Post Series: Origin Of A Commodities Trader

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