Abstract: The instant invention relates to a method of preparing an electrical contact from sub-micron size silver and less than two micron size cadmium oxide particles with the contact having finally dispersed particles of cadmium oxide within grains of silver. In the instant invention the particles of silver and cadmium oxide are intimately blended together and subjected to a reducing atmosphere at a temperature of from 321.degree. C. to 550.degree. C. to reduce the cadmium oxide and form an alloy powder of cadmium and silver. The alloy formed is held at an elevated temperature following reducing and then oxidized at a temperature of from 321.degree. C. to 550.degree. C. to precipitate a dispersion of cadmium oxide within grains of silver and form a silver-cadmium oxide alloy powder. In an alternative embodiment an alloy powder of cadmium and silver already prepared from sub-micron size particles of silver and less than two micron size particles of cadmium oxide is heated to a temperature of from 321.degree. C.