Hello everyone, today's article is going to be amazing! I'm very proud to be interviewing Nate, owner of The Copper Cave by Susquehanna Hobbies. As you know from my recent review of The Copper Cave and pictures of copper bullion I have purchased from The Copper Cave, I'm a huge fan of this store. In fact, I have purchased more copper bullion products from The Copper Cave than any other copper bullion store on the Internet. Also, they are now offering other metals too: silver, nickel, aluminum, and more - all irresistible products at super prices. Based on feedback from everyone, I'm really excited about this article because my interview with E Cohen Mint and interview with Market Harmony are two of the most popular articles on this site. After reading this interview, I highly recommend checking out The Copper Cave and buying some bullion from them, you will not be disappointed. Without further ado, let's dive into the interview!
Gold Why: Welcome Nate! Thank you so much for your time, really excited to be interviewing you.
The Copper Cave: Thanks Ian! It's great to be a part of your site. I can see from your previous articles that I'm in good company.
Gold Why: I'm absolutely fascinated with your store. Could you please tell us a bit about your background, how you got interested in the industry, and the "story" behind The Copper Cave and Susquehanna Hobbies?
The Copper Cave: Sure thing! I am a full-time mechanical engineering student; I'm fascinated by machinery, vehicles, and metals. In addition to my studies and running The Copper Cave, I also work in technical support servicing student computers. I have a pretty full schedule, but each position presents a great opportunity to learn.
Susquehanna Hobbies actually began about four years ago. As a high school student, I had the opportunity to work with a family friend who ran a model train company. I sold old and excess inventory on eBay to clear some space in the warehouse, and developed quite a following. When I ran out of clearance items to sell, I decided to build upon my existing customer base, and I opened my own website. While many of my classmates worked at fast food restaurants, I was shipping orders to customers in half a dozen countries. I am thankful for the opportunity I had. I learned a lot during those years, and I have been able to apply those lessons to the development of The Copper Cave.
My interest in metals began about two years ago when a friend told me about Ron Paul. Prior to researching the man, I had very little political interest. During the campaign, however, I became involved with a group of local supporters. I learned about the gold standard and hard money. I started looking to buy gold and silver, but realized my budget didn't go very far with precious metals. I discovered copper while browsing eBay bullion auctions, and starting doing some research. I thought that if silver was the poor man's gold, then perhaps copper was the poor man's silver, which made it perfect for me!
Gold Why: Like myself, you are obviously a big fan of copper bullion. You could have started a store focused around gold or silver, however you opted for a very unique market in its infancy - copper bullion. How did you decide to go with copper?
The Copper Cave: I am still a big fan of silver and gold, but there is something uniquely accessible about copper. For someone just starting out in the world of metals, gold and silver can be intimidating. They are very concentrated stores of wealth, and on a realistic weekly or monthly budget, your options are limited. A full 1-kilo bar of copper can be purchased and shipped for about the same price as two ounces of silver, or a single gram of gold. This makes copper a great material with which to explore the process of metal investing.
During my research, I found that the difficulty with collecting copper was the lack of a central place to purchase products from different makers. There were local dealers and plenty of websites to order other precious metals, but most copper products were only available on eBay or from small single-mint websites. I saw an opportunity to develop something completely new; a central distributor of copper products from many different makers. This would provide an easier ordering experience and a big savings on shipping costs.
I starting contacting all of the makers of copper bullion I could find to see if there would be any interest in such a project. The response was overwhelmingly positive. I took advantage of the knowledge I had gained from my first website, and developed The Copper Cave in a matter of just a few months.
Gold Why: I'm really envious of all the amazing products that you get to deal with every single day. What are some of your personal favorite products?
The Copper Cave: It's hard to pick favorites when there is such a wide range available. I get to handle everything from small 1/10 ounce coins, to 5 kilo bars, and everything in between.
I would say some of the most artistic products I carry are poured bars from Market Harmony. They produce traditional rectangular ingots, as well as flat bars and pyramid-shaped ingots, which are truly unique in the bullion world.
On the other end of the spectrum, our Ugly Abes copper pennies are quite a conversation piece. Some of these coins are brightly colored from oxidation, some have been bent or burned, and some are just plain ugly, but they each have a story to tell. As I am processing the coins, I often wonder if they spent time at the bottom of a wishing well, or if they were traded for penny candy at a drugstore counter 40 years ago.
Gold Why: On a similar note, what are some of your top sellers?
The Copper Cave: The first top seller was the 1-ounce kangaroo bar imported from Australian Copper Bullion. My entire supply sold out in just a few weeks, and when I tried to restock, even the maker was sold out! The good news is that they are back in production, and I expect to receive a new shipment this spring.
More recently, Market Harmony 10-ounce ingots have been flying off the shelves, along with kilo bars from a company we recently starting stocking, Capitol Mint.
Our most popular non-copper product is nickel. Canadian nickels minted from 1955 to 1981 are pure nickel, and they are the most economical way to buy pure nickel metal. We recently developed new packaging for all of our coin bullion products, featuring a heat-sealed plastic bag with an information card that makes for easy storage and attractive presentation.
Gold Why: Copper bullion is a newer market. I would imagine that many people visiting your site are completely new to the industry and just starting out. What is your advice to the newcomer? What's a great way to start out collecting and investing in copper bullion? How does this strategy fit, in your opinion, into the broader precious metals (and base metals) portfolio?
The Copper Cave: I always recommend people do their own research on potential investments so they can draw their own conclusions. The internet is an incredibly useful tool, and anyone reading this interview has a wealth of information at their fingertips. I try to provide some basic background information on my website, but ultimately it is up to each individual to decide what best fits their goals.
I personally came to the conclusion that metals have proven to provide a hedge against inflation, and as such are a safe store of wealth. While the stock market has been swinging wildly and the government is printing billions of dollars to bail out failing corporations, metals are seeing record popularity.
In times of economic turmoil many investors move money into precious metals, and gold and silver prices often rise while paper stocks fall. In a strong economy industrial demand for base metals rises, and copper and nickel prices take off. For this reason I think it is important to create a balance between base and precious metals, buying when prices drop to get more metal for your money.
As far as allocating a copper bullion collection, I would again say it is largely a personal preference. Some collectors hold all of their copper in the form of bullion bars, and others entirely in the form of copper pennies. I recommend a combination of both. Bullion bars are more refined and hold a steadier premium, but their initial cost is higher. Copper coins like US and Canadian pennies are much less expensive to obtain, but their price tends to fluctuate more with the spot price of copper. I think it is important to strike a balance between quantity (copper coins) and quality (bullion bars).
Gold Why: I could not agree more with your thoughts on diversification. Such a great industry, I have to imagine you have made many great friends and connections. Both on the supplier side and customer side, which relationships have been really fun?
The Copper Cave: I have met a tremendous number of very knowledgeable people through The Copper Cave. On the supplier side I have worked closely with the owners of several mints to offer feedback from my customers to help tweak their products to match market demands. Since The Copper Cave is the first venture of its kind, we both learn a great deal, and we are able to share ideas which ultimately benefit everyone involved. On the customer side I have found that nearly all copper investors are one step ahead of the curve. People who invest their hard-earned money in metals are already market savvy, and those looking at copper are excited to be involved in an emerging market. I had one customer in particular that has stayed in contact. He made several purchases leading up to Christmas and explained his intent to give bullion bars as gifts this year.
Gold Why: Many of the products on your site are completely new to me, even though I consider myself an "expert" within copper bullion. How did you find so many unique products?
The Copper Cave: I opened the website with a couple dozen products I found through leads on eBay and online forums. Once the website was up and running, it started to grab the attention of even more copper bullion producers, and the product line has been expanding ever since. I have even had the opportunity to offer input and suggestions towards some of the newly released products I carry.
Gold Why: You are adding new products at a rapid pace! Every time I check back, there is a new "must have" product (and hence I am constantly placing new orders). What are some of you newer additions? Any previews into the future? Similarly, what are some of the big plans for The Copper Cave in 2009?
The Copper Cave: Several manufacturers have revamped their products lines and added new items for 2009. I have also partnered with several new manufacturers already this year. I am always on the lookout for new products and potential suppliers, and I contact just about every maker I can find. The search also works in the other direction. As The Copper Cave has gained popularity, more manufactures have been contacting me to offer their products.
I have two big goals for 2009. First, I am in the process of adding new features to the website which will allow me to greatly expand the number of silver products offered by The Copper Cave. Mints such as E Cohen and Market Harmony offer products outside the world of copper, and I plan to carry more of their silver products, and unique silver products from additional makers, later this year.
The second expectation is the launch of our own product line. My intentions are to develop a few core copper products for production this summer. I have the advantage of handling many different forms of copper bullion with many different strengths, and I hope to use that experience to create a very popular product line while continuing to offer a wide selection from all of our existing suppliers.
Gold Why: That is awesome, I cannot wait and will be one of your first customers. The price of copper has been pretty hectic lately. What is your longer term outlook? Then diverging away from copper for a moment, what is your outlook for gold and silver? Would be really interested in your overall strategy in your personal collection and portfolio? Personally, I'm a huge proponent of gold (hence the name of my site), but also love silver and copper.
The Copper Cave: All of the metals have taken a hit over the past few months, but historically metals maintain an overall long-term uptrend. Unlike investments in company stock, or even banks, a commodity cannot go out of business. I never expect my collection of copper to be worth zero dollars. The same cannot be said for shares of any of the growing number of bankrupt companies, or savings in accounts at failed banks. I feel much more confident having my savings close at hand.
I am very pleased at the way gold has rebounded from its recent decline. I feel that silver will not be far behind. Copper may lag while home construction is slow, but ultimately I expect it to rebound. There is simply no substitute for copper when it comes to things like wiring, which is becoming even more important with trends to convert to more efficient homes and alternative energies.
My portfolio is still young, but I will continue to build it throughout my working career. My holdings are diversified; the only precious metal I do not currently hold is palladium, as I have not yet conducted enough research to make an informed decision and strategy for it. I also of course have a significant interest in copper and nickel. I believe my website serves as a fairly good indicator of what I hold there.
Gold Why: What is your favorite part about running The Copper Cave?
The Copper Cave: As you probably noticed earlier, I have trouble picking favorites. Running The Copper Cave connects me with many great people, it has increased my knowledge of metals and markets, and it continues to keep me on my toes with regards to changing trends in the economy. I suppose if I had to pick one thing, I would say my favorite part of running the business is receiving shipments of new products. Call me crazy, but every time I open a box full of copper, I can't help but smile.
Gold Why: Not crazy at all, I must agree with the wonderful experience of getting a shipment of copper, it always makes for a great day. What is your least favorite part of running The Copper Cave?
The Copper Cave: This one is easier to answer: paperwork. As a society, we have made it incredibly paperwork-intensive for ourselves to run a business. One cannot truly appreciate the amount of accounting and communication it takes to keep an organization operating until they try it for themselves.
Gold Why: We're always talking about metals around here! What other hobbies and interests do you have outside of copper? What do you enjoy doing on the weekends?
The Copper Cave: Between my studies, my job as a computer technician, and running The Copper Cave, my free time is pretty limited. When I do manage to sneak away for a few hours, I like to tinker with electronics, work on my truck, or head to the local dirt track to catch some sprint car racing. I am fortunate to live close to a half mile race track with a great community of local drivers, and some teams travel from as far away as 6-8 hours each weekend to compete. They run a four division program lasting 5-6 hours every weekend during the warm months, with admission costing about the same as a movie ticket.
Gold Why: Copper bullion is a new industry. How do you stay up on the latest trends? What are some great resources for everyone reading this article interested in getting started or expanding their knowledge of copper bullion?
The Copper Cave: While there are many resources for information on gold and silver, it can be difficult to locate information on copper bullion. I am always adding new information to my website and I hope that it will become a valuable resource for the industry in the future, but currently the greatest source of information is the collective experience of individuals involved in the market. I have found online forums and message boards to be a great help in locating this knowledge. I am most active on a forum called Realcent, which focuses largely on copper. Nearly half a dozen of my suppliers are also members there. Realcent is also home to many healthy discussions on other precious metals, since interests naturally overlap.
Gold Why: Ok, this one's going to be the "tough" question. I actually get it all the time and have my own answer. However, don't want to bias you with my answer, so here goes: It's obvious that the spot price of copper bullion is lower than the price of copper bullion bars sold on the Internet. This is not necessarily specific to your site, the price discrepancy exists everywhere. Why does there exist a premium between the spot price of copper and the price of copper bullion ingots sold online? What are your thoughts around this for someone looking to invest and collect copper bullion bars?
The Copper Cave: I'm glad you asked this question, as it is one that comes up quite often. There are actually several factors that lead to what appear to be high premiums on copper bullion.
The first factor is that copper is difficult to process. Unlike silver and gold, which melt very nicely and do not oxidize easily when molten, copper oxidizes readily when heated. It requires the use of special techniques or chemicals to produce pure copper without bubbles or contaminants forming.
As a result of this extra handling, pure copper is difficult to obtain anywhere close to the raw market trading price unless you have a contract to take regular delivery of multiple tons each month. Most of the bullion bar producers I work with are smaller companies, and such a contract is simply not practical. In more realistic quantities, pure copper stock often runs in excess of $7 - $10 a pound. Then they invest time in processing, sizing, finishing, and stamping or engraving the bullion bars. By the time I purchase the bars from each mint, pay to ship them to my location, and add a small mark-up to keep The Copper Cave in business, the price has reached the level you see on the website. I am still able to keep prices in line with the price most makers charge for direct sales, with the added benefit of having a variety of products available in one place.
There is a certainly a premium over the spot price for copper bullion, however the same is true for silver and gold. In this market it is not unusual for the premiums on silver coins to exceed $3 - $4 per ounce, and gold is regularly selling for $50 - $60 an ounce over spot. If we look at our popular 1-kilo size copper bars in terms of ounces (32.15 troy ounces), the premium over spot on copper is under 80 cents per ounce, significantly less than the premiums on both silver and gold.
Another factor to consider is an exit strategy for your copper investment. Looking at the spot price as the only exit value of a copper bullion bar is flawed. Most people do not plan to sell their silver or gold coins to a refiner because they have value beyond just the spot price in their current form, so why sell copper bullion bars to a scrap yard? Copper bars can be resold to other individuals, resold on eBay, or sold back to a dealer like The Copper Cave.
Gold Why: Nate, thanks so much for your analysis on the price of copper bars vs. the spot price of copper. This is incredibly insightful and a question I also get quite a bit. Your analysis is very informative. Nate, this has been an honor and absolute privilege. Thanks so much for your time and fascinating deep look into the copper bullion industry. As a closing thought, what is one parting thought about The Copper Cave that everyone at Gold Why should know?
The Copper Cave: Thanks again for the opportunity Ian. As a closing thought, I'd just like to say that if anyone has any questions about any of the products at The Copper Cave, please feel free to send me an email and I will be happy to help.
Gold Why: Once again, thanks so much Nate. Everyone reading, I highly recommend checking out The Copper Cave by Susquehanna Hobbies. As you can see from this interview, my review of The Copper Cave, and the pictures of the copper bullion products I have purchased from The Copper Cave, this is an amazing store. After placing just one order, you will see what I am such a huge believer in this store and repeat customer for life. Just remember, let Nate and The Copper Cave know that Ian from Gold Why says hi!
The Copper Cave's Contact Information:
The Copper Cave by Susquehanna Hobbies
PO Box 21
Northumberland, PA 17857
sales <<at>> copper cave <<dot>> com
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