Unfounded Allegations Regarding Perth Mint Certificate Program

[webmaster]

Subject:Unfounded Allegations Regarding Perth Mint Certificate Program
By: Mark O’Byrne, Gold & Silver Investments Limited

Overview: Further to recent articles containing unfounded rumours and allegations alleging that the Perth Mint does not have physical precious metals (especially silver) to back its storage programmes or to make deliveries we have received a few phone calls and emails from concerned clientele. Both the Perth Mint and Gold Investments strongly refute these absolutely baseless allegations.

Link: http://news.silverseek.com/SilverSeek/1206729777.php

[Danimal]

Dear Mark,

Should you ever lose your job, I suggest applying with the Bush Admin. As for your statement to re-assure concerned customers of the Perth Mint, you have failed miserably to assure me. As an american, there is nothing I am more disgusted with, than my own government. I have no trust in anything they tell me, other than if they mention any topic, I know it is for the purpose of telling another lie. Following that with mention of your credit rating only serves to further make you sound like another banker bought neocon. You say nothing to explain why your customers are so disgusted. The only conclusion I can come to after reading this, is that you expect your customers to be as stupid as those americans who re-elected bush. Further, it just makes me suspect that those who do not trust you are correct in thinking so.

[elixer]

So if the silver certificate punters have to wait weeks to get delivery of their silver from the fresh minting processes then just where is the silver that was supposedly purchased with the original transaction and stored on their behalf? Wouldn't a simple phone call to the stores and a 'hey blow the dust off that silver bar, mate' be all that it takes for prompt delivery?
And if you walk into the Perth Mint and try to buy a 100 ounce bar, or any other form of silver apart from maybe a special coin, they will tell you they have none in stock and there is a 6-8 week waiting period.
If the Perth Mint is awash with silver and gold then exactly where is it?
Got me baffled.

[HAG2:8]

I live in Australia and also fail to be comforted by the assurances offered.
I had wanted to convert certificates to 3 x 1000 oz bars back in December. My broker replied:"I have just been in contact with the Perth Mint. There are no exact 1,000 oz bars in at the moment, they are all over 1,000 oz which means you would have to get around 3,100 oz of silver at least for this to take place. The whole exercise including fabrication costs and storage costs is looking at costing you around $5,000. Are you aware of this? The Perth Mint and I do not think this a great option as it is back by the WA government and is there much gained for your $5,000?"

I was going to have to wait for them to get silver and create the required bars. And if I am only paying spot for the unallocated storage then where is their profit when it is sold back to me at spot? I ask the question is my money being used for other purposes than buying and holding physical?

As an unallocated certificate holder I do not have a client relationship with the Perth Mint but with only with one of the few authorised brokers.

I cashed in my certificates and waited over two weeks for the funds to hit my bank account, during which time I made a couple of concerned phone calls to the broker. He suggested that the Perth Mint was going to make the deposit to my bank account but I think i read that the Perth Mint sends the proceeds to the broker (I could be wrong) - so what if the broker goes bust while he has my money for two weeks - I have no guarantee from him?

Also I would like to see some figures of just how much silver is held in allocated and unallocated form.

I have some unallocated gold certificates still with the Perth Mint and although more comfortable with the supply situation re gold I am not leaving it there too much longer.

[elixer]

Here is a guess at the business model for the Perth Mint.

First, put up flashy sign saying guaranteed by West Australian Goverment. If doubted, point to flashy sign continuously. Place single silver bar in showroom to impresss punters - blow dust off it occasionally because there is only one bar and it is going to be there for years.

Next, sell silver cerificates. Charge no storage fees for silver because of course none is purchased. Use money, interest free, often for years.

Case 1. If punter wants to sell silver - that is his dodgy certificate - then simply pay him out at the current market rate using money from general account. If silver price has increased then the extra cost is a mere pittance compared to the use of the invested funds supplied interest free. We can note in this case that no physical silver was bought and sold. It was simply moonbeams and general lights flashed by the Wizard of Oz. Punter walks away believing that he once owned silver and once sold it. Punter is living in dreamland but everybody is happy.

Case 2: Punter wants to physically own silver. Perth Mint places an order at the refinery and 2-3 weeks later the bars are delivered to punter, after the charging of smelting costs. Money to buy silver is simply withdrawn from general account and punter leaves with silver. Everybody is happy.

Case 3: Punter wants physical silver. Refinery says there is a chronic shortage and cannot deliver. Perth mint starts to sweat, develops strange mating dance with peculiar steps designed to stall for time. Everyone lives with hope. Punter is not happy, Perth Mint is not happy.

Case 4: Word is out that there is a silver shortage. Punters mob Perth MInt wanting physical silver for their certificates. Refinery says forget it. Perth Mint goes to plan B, escape tunnel to Swan River, high speed boat awaits with enough fuel to get to Rio..

[HAG2:8]

Good one Elixer. I too thought that if you wanted to see "your" silver they would blow the dust off a bar and after three days notice would show it to you. Then next day or week they would show the same bar to some other punter. Buyer beware.

[elixer]

A disturbing thought is that I actually think that the Perth Mint is one of the more solid and ethical dealers of gold and silver. Imagine what sort of dodgy deals are going on beyond the even darker side of the swamp.

I seem to remember reading an article that a major US dealer went bankrupt back in the 80's or 90's and even the US government couldn't get their 200 millon ounces of silver back.

And another dealer was taken to court for charging storage fees for silver when they had no silver in storage and their defense was that 'there was nothing wrong with this as it was a standard industry practice..'

Sheesh, these guys could make a lawyer blush..

[LouisTheFly]

Wow I feel much better now I know the former bankrupt W.A government will back the certificates as the Perth Mint HAS refused to deliver the 100kgs of silver to an investor and wont buy it back at the moment. Charges HUGE holding fees. Lots of complaints from dealers about Perth Mint too.......
Not convinced Australian
LTF

[JimO]

This statement is the tricky one: "For every ounce of precious metal that is sold to a client, the Perth Mint must buy a corresponding ounce in the marketplace." What does "in the market place" mean? Sounds like more paper silver to me.

[TTAZZMAN]

Originally Posted by elixer

Here is a guess at the business model for the Perth Mint.

First, put up flashy sign saying guaranteed by West Australian Goverment. If doubted, point to flashy sign continuously. Place single silver bar in showroom to impresss punters - blow dust off it occasionally because there is only one bar and it is going to be there for years.

Next, sell silver cerificates. Charge no storage fees for silver because of course none is purchased. Use money, interest free, often for years.

Case 1. If punter wants to sell silver - that is his dodgy certificate - then simply pay him out at the current market rate using money from general account. If silver price has increased then the extra cost is a mere pittance compared to the use of the invested funds supplied interest free. We can note in this case that no physical silver was bought and sold. It was simply moonbeams and general lights flashed by the Wizard of Oz. Punter walks away believing that he once owned silver and once sold it. Punter is living in dreamland but everybody is happy.

Case 2: Punter wants to physically own silver. Perth Mint places an order at the refinery and 2-3 weeks later the bars are delivered to punter, after the charging of smelting costs. Money to buy silver is simply withdrawn from general account and punter leaves with silver. Everybody is happy.

Case 3: Punter wants physical silver. Refinery says there is a chronic shortage and cannot deliver. Perth mint starts to sweat, develops strange mating dance with peculiar steps designed to stall for time. Everyone lives with hope. Punter is not happy, Perth Mint is not happy.

Case 4: Word is out that there is a silver shortage. Punters mob Perth MInt wanting physical silver for their certificates. Refinery says forget it. Perth Mint goes to plan B, escape tunnel to Swan River, high speed boat awaits with enough fuel to get to Rio..

lets not forget the possiblility of mint short selling and trying to rebuy at lower rates....