Perth Mint Crisis Watch 5

(More horror stories!)

Silver Stock Report

by Jason Hommel, June 5, 2008

I'm happy to report a rumor that I heard a few days ago that the Perth Mint had a few hundred 100 oz. bars now for investors who want to take delivery.  Fantastic.  Get them while you can.  I hear the bars are available for about $1.80 over spot. Let's do the math on that, shall we?

200 bars x 100 oz. x ($17.30 + $1.80) = $382,000

Remember, Perth Mint has a total of an $880 million in bullion liability to certificate holders.

So, they may have had $382,000/$880,000,000 or $1 worth of 100 oz. bars for every $2303 on deposit.  If true, that's much less than a 1% backing, actually 0.04% backing!  Wow!  No shortage there!  Get the bars while, or if, you can.

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Peter Schiff slandered me in his radio program yesterday.  Don't worry Peter, I won't sue, as I don't expect justice from the system anymore, which is why I buy silver.

June 4th, start listening at 31:00 and Peter discusses me and Perth Mint at 31:40.
http://www.europac.net/radioshow_archives.asp

http://www.europac.net/media/PeterSchiff_06-04-2008.mp3
You can hear it half way through.

Peter has a dual bias.  Peter sells the Perth Mint certificates.  And he is woefully uninformed. 

Peter starts out saying that the Perth Mint certificate program is good in case of government confiscation by the U.S. government.  But he seems to ignore the possiblity of current or past confiscation by the Australian government!  Irony of ironies!

Peter thinks I've gotten a "couple emails" about delivery delays from customers of the Perth Mint.  No Peter, it's about 30-50 complaints.  Are they all lying?  What a conspiracy!?  And I'm not the customer service rep for the Perth Mint, so why are so many people complaining to me? See past reports, with complaints, here:

Perth Mint Crisis Watch May 23, 2008
Perth Mint Crisis: Solutions and Ramifications May 23, 2008
To the largest newspapers in Australia May 22, 2008
To the government of Western Australia May 21, 2008
Poor Prospects for Kitco/Perth/Matthey May 19, 2008 
Kitco / Perth Mint / AGR Matthey / Bullion Bank Connections May 17, 2008
Will Kitco Sue me?! May 16, 2008 
Silver Shortage Drives Men Nuts March 31, 2008
Perth Mint and Kitco Scheme Exposed March 26, 2008

I find it rather humorous how Peter really stammers and stumbles when he tries to explain that the Perth Mint has all their silver in the form of 1000 ounce bars, and, and, and, and, and, if people want 1 ounce rounds or "little bars" then the mint has to fabricate them, and it takes time depending on how busy they are. 

But the whole reason for even offering the certificate program, is ostensibly, to be able to provide silver for operations so that they will have those final silver products available for their customers.  It's ridiculous for them to ever run out, since the entire reason for the certificate program in the first place is to provide the silver to make sure that they have the silver for operations so that they never run out!  Therefore, if they run out, it's evidence of a serious problem!

And hey, if "running out" is no indication of any problem, then what, pray tell me, would be an indication of a problem?  What other evidence would indicate a problem if not that?  Do you expect to see Perth Mint employees leaving the building with hands painted red?  Come on!

Peter slanders me, saying I've made "bogus accusations", but I've not made any accusations, many Perth Mint customers have. 

While Peter is incensed at the possibility that the Perth Mint might not have a full backing for their precious metals, Peter asks, "Why would the government do that?"  I've answered that already.

Excerpt from:
http://www.silverstockreport.com/2008/perth3.html

I don't think the Perth Mint is engaged in any conspiracy to defraud people.  More likely, they're simply "doing their jobs."  I believe that the trouble was low silver prices.  For years, silver remained at $5/oz., and minting costs, I assume, were about $2.00 per ounce, at the bare minimum in the private sector.  Like most government agencies, the Perth Mint was probably not too concerned about costs.

During silver's bear market, a lot of silver was coming to market by investors as "recycled siver", who were dumping their silver, thus depressing prices of all silver products, below market prices, which, as all student of free markets know, creates a challenging environment for all producers, who usually find it hard to compete under such circumstances. 

What would you do if you worked at the mint?  You might not even know if minting costs were as high as $3-5.00/oz on top of the silver price, because things might be done the typical inefficient way of all governments, and your job may well have depended on continuing to mint coinage, whether at a profit, or loss. 

The Perth Mint appears to me to have been funded for years, by precious metals loans from banks, which is similar to how all government operations on the planet are funded, by loans.  Are there any governments not in debt?  The difference is that these are precious metals loans.  The other difference is that these precious metals loans were transfered to the public via the selling of the Perth Mint certificate program.

The Perth Mint says in their annual report that these are "non interest bearing loans" and technically, that is correct.  However, with precious metals prices rising at about 25% per year, these loans are quite expensive, and will grow much more expensive as precious metals prices continue to rise.


So, I have left several questions on Peter's answering machine.  I asked him:

Do you know how many complaints I've gotten about the Perth Mint?  It's about 30-50, not "a couple".

Why would so many complain to me, given that I'm not a perth Mint customer service rep?

Do you know the size of the Perth Mint's liabilities of their certificate program?  (It's $880 million Australian dollars (which are worth about the same as a U.S. dollar.)

Do you know the estimated annual silver demand in ounces and dollars?  (It's about 60 million ounces, or about $1 billion at $16.66/oz.

THE PERTH MINT'S LIABILITY IS WORTH ABOUT AN ENTIRE YEAR'S WORTH OF SILVER INVESTMENT DEMAND!

Do you know the Perth Mint's production capacity of making 100 oz. silver bars?  I don't.  But the Perth Mint ought to know their own production capacity, and so should their certificate resellers, such as Peter Schiff.

Peter, let me warn you.  If you don't figure this out, some of your customers might start calling you Peter Shifty or Peter Shiftless, or worse.   It's your reputation on the line here, not mine.  Because I'm not selling any paper silver, and I'm not making any accusations.  Just reporting.

By the way, the Perth Mint's lawyers covered themselves, and let the real truth slip out:

http://www.perthmint.biz/downloads/Investment/PMG%20Tax%20Issues.pdf
See Page 3, two paragraphs from the bottom of the page, where it says:

"Gold Corporation continues to be the owner of the gold bullion backing the PMG [ie, certificate]. However,
even though Gold Corporation holds gold bullion in order to back the PMGs, it is not required
to do so and does not hold gold bullion for the benefit of the Holder."

Peter, have you ever heard that if you are sitting at a poker table, and if you cannot figure out who the mark is, then you are the mark?  Figure it out. 

Peter also wonders what my "agenda" is.  Peter, I'm extremely transparant.  I'm trying to help people acquire physical silver. 

Peter, we know your agenda, to line your own pockets as you are a Perth Mint certificate reseller.  Tell us, what are your commissions on that program?  And if they can affford to pay you a cut and commission as they surely must be doing, how can they afford to buy silver in the open market for their customers? 

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If the Perth Mint cannot handle the situation today, how will they handle the increased volumes as silver prices rise as they certainly will?


Here's a rather shocking complaint posted at goldismoney.info.  The author is saying that the Mint is badmouthing their customers, and inventing extra charges at whim to take delivery of physical bullion now, saying that people will be assigned a 6 month storage fee if they try to get delivery of physical silver bullion bars.

http://goldismoney.info/forums/showthread.php?p=1131037#post1131037

Here's another Perth Mint hell-story:

I was dealing over the last 2 years with the Perth Mint buying
and selling over $200,000 worth of gold and silver via the Dublin agents
- each transaction was one cock up after another, long delays,
Dublin/Perth not executing at the right buy/sell fixes I wanted,
certificates getting lost because they were not sent to me by registered
mail (to save money...) ... it all became too much and I'm now all in
physical and can sleep soundly at night...

When things go ballistic Perth will not be able to cope, they can barely
cope now, not answering phones etc etc etc

It is a disaster waiting to happen. And BTW I do believe parts of the
Perth operation/govt of western Oz is insured by Lloyds (I may be
wrong), but if several major banks implode, which is still a
possibility, the derivatives crisis in waiting could easily take Lloyds
down too.

All best!

Andy

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The good news is that people are growing concerned enough about the Perth Mint to start taking actions, such as closing out their unallocated accounts with the Perth Mint.  These actions are also showing up as questions to the other "experts", like Peter Schiff.  This is a very encouraging sign, as it means more and more people are waking up to the real situation, which will bring the real situation out into the open, and the truth is coming out.

A coming default of the Perth Mint could well be the exact kind of major catalyst that drives the silver price upwards beyond what we are already seeing.

By the way, regarding the U.S. Mint's illegal rationing of American Silver Eagles.  No, I don't intend to sue or to organize any "class action" lawsuit because no, I don't expect justice from any judges in the land.

The only "class action" that people need to take, is to buy and bid up the prices of real physical silver.  When judges ignore the law, the law will still prevail.  It's the law of supply and demand, and it will not be denied!

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Sincerely,

    Jason Hommel

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