Chartered Accountant says "This is a flat out misrepresentation [by Perth Mint]"

Just imo, but it's a complex topic, requires a lot of research and analysis above and beyond the capabilities of the average bookkeeper and there probably aren't that many qualified people out there who will want to stick their necks out if there could be something to the analysis in the video. Why? Because it could invoke displeasure and career consequences from the heavy brigade.
 
TL;DR

Perth Mint present figures to demonstrate they have 'physical metal inventory' on hand. ie metal assets in the Mint's vault are greater than metal liabilities to its customers.
TOTAL ASSETS = $6,481m
TOTAL LIABILITIES = $6,398m
therefore net +ve = $83m in metals

However, the accountant correctly points out that the assets figure of $6,481m includes a 'cash receivable' item of $843m. This item does not belong in a list of 'physical metal inventory', as a cash receivable item represents metal that has already left the vault and awaiting payment by the recipient. [1] It certainly does not represent physical metal inventory' in the vault.

So, if we remove this cash receivable item from the list, then we get a more accurate representation of Perth Mint's 'physical metal inventory' on hand.
TOTAL ASSETS = $5,638m
TOTAL LIABILITIES = $6,398m
therefore net -ve = $760m in metals

[1] The accountant explains that the Perth Mint try to define this cash receivable item as Perth Mint's own metal 'on consignment' that is due to be returned to the Mint. This is what the accountant suggests is an accounting irregularity, as the Mints own records show this metal has indeed been sold to a 3rd party and the Mint is awaiting payment; i.e. The $843m is a cash receivable item and should not be considered 'physical metal inventory' on hand.

On a personal note, I've been involved with banking scandals and this is the sort of misrepresentation corporations use to cover up misconduct. The Perth Mint is paying musical chairs, and the music is about to stop.

Let's see if the mainstream media shine a light on this.
 
I have read in the past that it is a common practice in the industry to perform pm swaps musical chairs, ie come audit time pm's are swapped in, the swapped in pm's are rented for the duration of the audit, and after the audit they are immediately swapped out again. Poof and it's gone, just like that, even though the audit confirmed, showed and proved that the product was there. For all of 10 minutes while the audit took place.

It doesn't take much imagination to guess just how much apparent pm's apparently in secure vault storage, supposedly belonging to how many major players, can be conjured up out of thin air through this method of revolving swaps and audits.

As far as I'm aware this practice is legal and conforms to accounting standards in the affected territories.

This is not an endorsement of the practice, just a layman's understanding explanation of how that system apparently works in practice.

On a personal level I have never believed claims of pm holdings by any major vault or bank because there is no way to publicly verify what the true situation is. It doesn't matter how many auditing firms sign off either, that doesn't prove anything as is confirmed by the long and growing list of major auditing failures and scandals around the world.

That's why I steer well clear of any kind of pm ETF and derivative and why I steer well clear of any managed pm storage service and vault. There have long been suspicions that the paper pm and ETF holdings are exponentially larger than physical, my best guess would be that those suspicions are well-founded.

All imo, I have no way to prove any of this one way or the other. It's just one person's view.

If you don't hold it you don't own it.
 
Another view from Sprott


Untrustworthy Unallocated Gold
Written by Craig Hemke, Sprott Money News

June 16, 2021


Over the past several months, we've written on multiple occasions about the issues and loopholes within the global unallocated gold market. This fractional reserve system risks collapse with every run on true physical metal, and recent events demand this update.

First of all, here are two links to previous posts on this topic. Before we begin, you might check them out:


Much of the focus lately has been upon the unallocated accounts at The Perth Mint. The Mint and its defenders have tried to shift the focus away from close inspection by casting aspersions upon those who dare question their business methods. Here's ETF kingpin and Perth Mint "advisor" Kevin Rich appearing on Kitco TV to disparage "bloggers" who dared to actually inspect The Perth Mint's publicly available documents and statements:



Watch this video on www.youtube.com

According to this Kevin Rich fellow, you'd be foolish to believe anything you see on the internet because "the Perth Mint website states there's actual bullion behind the depository programs" and that "unallocated programs are fully backed with physical product". Take his word for it, I guess. And what's funny is that the statement he cites is dated March 17, 2021. It's by no means current, and it does nothing to address the growing controversy.

Screen_Shot_2021-06-15_at_1.06.08_PM.png



And here's the thing: The "bloggers" in question are not bloggers at all. Instead, they are certified auditors with an extensive background in finance. Rob Kientz is a former auditor with experience at several "Big 4" accounting firms, and Dan Vigario is a London-based Chartered Accountant with full accreditation and experience in forensically deconstructing financial statements. These guys are legitimate experts, and their analysis cannot simply be waved off as "speculation by people on the internet".


So with that in mind, I implore you to watch this latest video from Rob and Dan. It's lengthy, but it's worth your time. It's not simple, either, but the guys do a great job of explaining the complicated issues in an easy-to-understand manner.




Watch this video on www.youtube.com


It's quite obvious to me that Perth Mint is running a fractional reserve system in their unallocated accounts. Of course they are! How else can you explain the dramatically lower storage fees and insurance costs that come with an unallocated account in the first place? And that's fine. Many other companies run and manage similar unallocated schemes, and their customers appear to be just fine with it all...as long as they don't all show up one day and request immediate delivery of metal that the unallocated account provider does not currently have on hand.


The point of all this is threefold:

  1. Unallocated accounts are just another part of the alchemy the bullion banks and their friends in the precious metals industry have used to expand the availability of "precious metal equivalents". This system and the leverage inherent to it serves a role in creating the illusion that gold and silver are far more abundant than they actually are.
  2. If you are currently an investor in an unallocated account, understand that your reduced storage and insurance costs are due to the fractional reserve component of the unallocated account. As long as you hold unallocated metal, the only thing you truly own is exposure to price.
  3. Only true, physical allocated and segregated metal contains no counterparty risk. With everything else—from ETFs to metal certificates to these unallocated accounts—comes the counterparty risk of untimely liquidation and default.

Again, please take the time to watch the video posted above from Rob and Dan. Draw your own conclusions and then act accordingly.


About Sprott Money
Specializing in the sale of bullion, bullion storage and precious metals registered investments, there’s a reason Sprott Money is called “The Most Trusted Name in Precious Metals”.

Since 2008, our customers have trusted us to provide guidance, education, and superior customer service as we help build their holdings in precious metals—no matter the size of the portfolio. Chairman, Eric Sprott, and President, Larisa Sprott, are proud to head up one of the most well-known and reputable precious metal firms in North America. Learn more about Sprott Money.
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My layman's understanding of the article TL;DR

  • Sprott appears to believe that the holdings of physical don't match the moneys in accounts on deposit at Perth Mint.
  • Should all owners demand immediate delivery it would not be possible to fulfil all orders, at least not on the day. How long it would take is anybody's guess.
  • There are less physical pm's available (at least to the public) than what the public are led to believe. The implication is that much of the pm market is "virtualised" which would be a euphemism for the same physical pm's being oversold multiple times to multiple owners.
  • The following implication is that if all pm owners in these schemes were to claim delivery of their physical pm property, the market would unravel and many (the majority of) these musical chairs players will be left without chairs, or in this case, physical pm's.
  • If you don't hold it you don't own it.
 
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What the actual state of affairs at the Perth Mint are is difficult to ascertain but if it were me investing my money in pm's, I'd expect delivery upon payment.

I can appreciate why others may have reasons not to take delivery and would rather leave the management of their property to third parties but imo such schemes are fraught with dangers and risks above and beyond what I would consider reasonable and these risks increase exponentially during times of turmoil.

A vendor either has stock to sell or doesn't. If they don't then this needs to be clearly stated. A buyer putting up money with a view to future delivery is taking a risk, particularly if many other claimants are already waiting in line. The risk increases proportional to the number of claimants, and in particular, the number of claimants demanding to take physical delivery. The words "take physical delivery" really being the key terms.

If a vendor cannot make good on delivering the claims of all claimants they are operating a fractional scheme which is a fiat or "paper" based system, not a pm based system. The fact that pm's are involved or associated with the product is incidental. If the physical stock to settle all claims isn't present then the system is paper / fiat based and the pm holdings are virtual, meaning non-existent, to many of the claimants.

My version of TL;DR
- Buy from a supplier who has supplies in stock, take immediate physical delivery and be wary of having your property managed by third parties because you may find yourself without a chair when the music stops.
 
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A large contingent of “well known members” critical of John Adams on this site for some reason? I’m not a smart man but having been watching this site for many years it would make sense that anyone that’s been watching the silver space would have nothing but praise for the guy. Odd don’t you think?
 
Stackem High said:
A large contingent of “well known members” critical of John Adams on this site for some reason? I’m not a smart man but having been watching this site for many years it would make sense that anyone that’s been watching the silver space would have nothing but praise for the guy. Odd don’t you think?
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It's quite odd when individuals with vested interests (i.e running a bullion business) push false claims (shortage of physical, defaults of delivery) yet do not produce a single shred of evidence in their defense but instead threaten other individuals with legal repercussions for calling out their claims.

In fact, it's odd that someone who started a gofundme for a legal defense but swindled all the money is not seen as anything but a lying cheating swindler.
 
How does one even become a “well known member” on this site anyway? I know a dozen members that have been on here for 10+ years trading and contributing constantly and they are only “members” or “active members”. Things are becoming clearer everyday, the emperor has no clothes, and the music is stopping fast. The truth will win out.
 
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Stackem High said:
How does one even become a “well known member” on this site anyway? I know a dozen members that have been on here for 10+ years trading and contributing constantly and they are only “members” or “active members”. Things are becoming clearer everyday, the emperor has no clothes, and the music is stopping fast. The truth will win out.
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It's not based on length of membership but quality of posts (how many likes you receive)
 
And of course the “Silver Stacker” badge is added below if you contribute with a small donation towards the forum running costs to unlock the premium members area of the forum.
 
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