I think it was a figure of speech (meaning they could simply decide to cease trading as opposed to being dragged through the process of appointing external administrators, liquidating assets like the Perth Mint building/coin presses/the contents of the stationary cupboard/etc. and being taken to court by creditors). If everybody did turn up and ask for their metals then the Perth Mint would certainly shut the business down (temporarily) because they'd have no metal to work with and everyone in the refinery would just be sitting around drinking cups of tea and reading the paper.
I'm assuming in the extreme situation where all/most of our clients want to take delivery that there won't be anyone willing to supply/lend physical metal to us to replace the physical we are giving our Depository clients.
So if you have roughly (excluding Pt) 1million oz of gold and 50 million oz of AG (total 3B) Not sure where you got those figures from, we've never disclosed the gold silver quantities. Maybe you're trying to draw me out? why do you state that the unallocated deposits are guaranteed by the WA government and should the guarantee be called on, the cash paid by the WA government will be used to buy in new metal to pay out customers. If you have all the metal on board why is that guarantee required ? It is there to cover situations where we lose the metal, not because we don't have it in the first place. While we have insurance in case of a theft, if the insurers don't payout then we call upon the guarantee. recall times when metals were not available especially silver bars. Now I realize that the metal will be replaced by new purchases. However, in a metal run, this may suddenly deplete supplies as people rush to buy and replacing inventory will be difficult if not impossible - short term. Your reference to "replacement" is key. When non depository clients buy physical from us we immediately buy replacement metal. If we couldn't buy that replacement metal we would stop selling coins and just sit there with all this physical backing the depository client liabilities - we would not run down the physical inventory leaving a shortage/gap against what we owed our clients.
Thanks for the reply Bron. My estimates of gold and silver are based on a $3B reported working inventory and that most mints are selling equal values of gold and silver. So from your explanation, if there was a run on metal as we have seen in the past on silver, and your suppliers were also under pressure so that replacement was not possible, you would stop selling inventory metal to the public. I think that is a very important fact and should be in bold on the PM website. It would certainly stop negative comments as we have recently seen. Thank you.
I think being such an old institution used to dealing with very sophisticated financial types the language the Perth Mint sometimes uses is a bit hard to understand. It would probably help if the description of their operations came in a Plain English version as well as the Lawyer Version.
Ronnie 666 & Big AD - I wrote this many years ago to try and make it plain English http://www.perthmint.com.au/investment_invest_in_gold_storage_options.aspx Needs a re-write or more explanation? renovator - it was not made from client Allocated because that is, well, allocated to clients. The 1 tonne coin is part of our assets that backs our liabilities. Technically as it was a recent physical addition, it is probably funded from borrowed in (leased) gold rather than client unallocated.
You're well informed, rbaggio. I'm speaking with Kerry Lutz tomorrow morning 6am and should have a writen response to Andy's article on our corporate blog tomorrow as well.
I'm a big fan of Kerry and a regular sub to his Podcast. Great to see you back on there Bron, you should keep the rest of us plebs in the loop when you're going to be doing another podcast. Always good to hear you speak about Perth Mint's position on things.
My response to Andy's posts can be found here http://www.perthmintbullion.com/blog/blog/12-10-31/Response_To_Miles_Franklin.aspx
First, I have to say that I am continually impressed by the work you do online, explaining things and correcting mis-understandings, and the level of professionalism you do it with. You are a credit to your employer. (*) When Andy is talking about segregated bars, he's talking about each client's metal being stored separately from other clients' metal; you're talking about client metal being stored separately from the Perth Mint's operational metal. My understanding was that Andy is correct - client metal is fully allocated, but stored in a non-segregated way i.e. my metal can be stored mixed up with other clients' metal. But you then go on to say that clients can mark their bars during an inspection and on the next inspection, they will see the same bars, which suggests that specific bars *are* stored separately. If I buy metal in the PMDP, do I get specific bars assigned to me, and are they stored separately from other clients' metal? The clause you highlighted in the agreement ("2.2a ... Allocated Precious Metal will be identified by specific bar reference numbers or, in the case of unnumbered bars or coins, specific descriptions of the Allocated Precious Metal") seems to suggest yes/no, which would mean Andy is right, client metal is not segregated. But this seems odd, if metal is stored un-segregated, when I come in for an inspection, how do you know where to find *my* bars? What does "specific descriptions of the Allocated Precious Metal" mean, exactly? Identifying marks? Or "the bars in the box that belong to Customer #12345"? (*) My understanding is that Miles Franklin is planning in to bring in external auditors i.e. they don't have them now. They (and it's not just Andy) make a big deal about the fact that they have personally seen and checked the metal in the Montreal vaults, as if that's suppposed to mean something! [rolleyes] (*) Your job title is "Manager, Analysis and Strategy" which doesn't seem to be a PR role, and you often include a disclaimer that you are speaking personally, and not for the Perth Mint. But this response certainly looks official, on Perth Mint letterhead, so it seems that some times you *do* speak for the Perth Mint. Are you, in fact, an official spokesman for the Perth Mint? I'm on the road for the next few days, so I probably won't be able to participate in the discussion, but I look forward to your reply
Well Bron, I think you were pretty comprehensive in your reply. I am surprised Andy went as far as he did. But, I guess he does call himself "Ranting Andy".
Bron posted here in a personal capacity to draw attention to a response he wrote in an official capacity that is posted on the Perth Mint's (official) website.
Its a mix. Generally with non-numbered bars or coins we stack them on the shelves together. For example, if we have 99 clients each with a 10oz bar then there is a pile of 99 x 10oz bars. If we sell a 10oz bar to a client wanting allocated, we will put that 10oz bar with the rest of the 99. When we do a stocktake we run a report off the computer which gives us total number of bars/coins we should have on each shelf location. It will say 100 x 10oz bars and then we count that pile (and so on for each product and shelf/bin location). Needless to say, this is just an efficient way of running the vault. If someone came along to look at their 10oz bar and drew a smiley face on it, the vault people would then say OK this one is now pretty specific to this client, so they wouldn't put it back with the other 99 bars and probably give it its own shelf/bin location and adjust the inventory records accordingly. If all the other 99 bar owners did the same then yep they would all become physically segregated from each other, and our vault guys would probably get a bit annoyed and stocktakes would take a lot longer. In the end it doesn't materially change anything as there are still 100 x 10oz bars in the vault. In other cases all of an allocated client's metal is located together. For example if someone bought some 1oz gold coins, 1oz silver coins, a Kilo silver, then that gets processed like all the other client (phone/online) orders by our fulfilment department into one cardboard box, the only difference being that the delivery address is the Depository vault (which is separate from our operational vaults) rather than to your house. The vault people would likely just put that box on a shelf/bin location and leave it as is. A lot simpler than trying to unpack it and put the 3 coins into piles with others. We run it this way to get the most use out of the space and simplify management of the vault and stocktakes. As I said in the response, I'm not really sure what extra benefit/safety is achieved by a vault operator placing a bit of air space between each of those 100 x 10oz bars? BTW, the above is "official" I've not found a forum where you can change you signature on a post by post basis. Sometimes I am speaking personally, sometimes officially. Usually when I'm talking about wha the Mint does its official, nothwithstanding the signature disclaimer. Anything I do on the corporate blog is certainly official. I am authorised to speak officially and with journalists. I don't consider what I do on the net at PR, more education (which is part of my job title brief). Its also because no one else in the Mint is prepared to step beyond the safe confines of our corporate websites and take on all comers in the fight club that the precious metal blogosphere can sometimes be
Great explanation of storage and such. Extra points awarded for your last sentence. Re your signature, could you maybe drop the second part. Disclosure of your employment status only without the opinion disclaimer means that whether a post is your own opinion or Mint based wont matter. You can clarify in your posts whether its official policy or your own opinion, or other posters can seek clarification if necessary.
I've always thought 'ranting Andy' Hoffman was smart :lol: Seeing how he's proven himself to be ignorant in regards to the Perth Mint, what else is this man wrong about?
Kerry Lutz interview link and discussion here http://forums.silverstackers.com/to...he-perth-mint-really-does-have-the-metal.html
