05 September 2008

Reply to a Reply

From the start, I’d like to direct readers to my About This Blog. As I say there, my blog is not a Perth Mint mouthpiece and all my comments are my personal opinion and not endorsed by the Mint in any way. If you have a question about their operations or a complaint, ask them directly yourself, I am not their complaints department.

It is also probably important to be clear that I am bullish on gold and silver, although I take a long term view. If you sense I’m taking a bearish view that may be because I am a contrarian personality type and thus have a tendency always to look at the other side of any dominant view (and challenge my own views), as I believe the truth usually lies between the extremes.

Jason writes: I also think its normal for there to be shortages of silver and gold when inflation is raging out of control, and when the markets are manipulated, but I suppose we don't agree on reasons like that.

The comments I’ve made don’t exclude inflation or manipulation as factors. It is unfortunate that many have no confidence in COMEX; thankfully Australia does not have any precious metal futures markets. All I’m looking to do is to contribute some additional things to consider that no one else in the “gold internet community” talks about. Some of these factors may be important to the shortage of (retail) silver, some not so. It is just extra information that I hope fills out the picture, as no one knows everything.

Jason writes: That's insane. Right downstairs, they often run out of 100 oz. bars, and reportedly have no 1000 oz. bars for sale.

I asked our Shop if they have 100 oz bars and they said they have them available, so instead of relying on Jason’s “reportedly”, all I can say is that if you want to buy silver, ring our Shop up and buy it. Once your money clears, they'll ship. At the end of the day, my words and Jason’s words don’t matter – actions speak louder than words. And the only action that matters is delivery. Period.

Jason writes: Besides, that's a lie. Wholesale quantities in silver are 1 silver futures contract of 5000 ounces, which is about 1/6th of a tonne, not 20 tonnes! Further, I note that Nigel did NOT say he would SELL 20 tonnes of silver. He only wants to "deal" in that, minimum. He probably needs to buy that much to pull his fat out of the fire, as I will explain below.

The definition of “deal” by Encarta Dictionary within Microsoft Word is “an agreement, arrangement, or transaction, usually one that benefits all the parties involved”. This includes BOTH buying and selling. But to be clear, Nigel will SELL physical 1000 oz silver bars. Also, what I said was "he will do deals for a minimum". I did not say that "the wholesale market only deals in this minimum", you read that into my statement. That is just his minimum. He is the Treasurer for the whole Mint, not a retail bullion dealer; this is the deal size he operates at. Of course trading occurs in the wholesale market for quantities lesser than that. My point was that bulk quantities of silver are available in the over the counter (OTC) spot market. They are, and Nigel will supply them. Period.

Jason writes: AGR Matthey closed their silver operations!

Incorrect. AGR Matthey have not closed their “silver operations”. I quote from a letter dated 18 August 2008 to AGR Matthey’s customers:

“The Board of AGR Matthey has taken the decision to exit the jewellery business. AGR Matthey will no longer manufacture jewellery products in Australia or New Zealand. … The industrial business (medical and brazing alloys) will continue. … Arrangements are being made for fine gold grain (minimum order quantity 1 kilogram) to be made available through Perth to wholesale customers with delivery via Brinks premises on the eastern seaboard, provided there is sufficient demand. Larger secondary refining customers may be serviced through the refinery in WA.”

AGR Matthey refines around 10% of worldwide mine production and silver is a by product of that refining. It is not reliant on sourcing gold or silver from the general public. Australia is a net exporter of precious metals – in 2006/07 Australian mine production was 1674 tonnes with 431 tonnes of refined silver exported according to ABARE. Logically this means that there is enough silver to meet domestic demand.

Since the rest of your article with its “might have been” type speculations hinge on this error of fact about AGR Matthey, they are also incorrect and thus don’t warrant a response.

The Perth Mint’s unallocated facility is not the be all and end all of the organisation; the Mint sells bars, coins, numismatic products, unallocated storage, allocated storage, and an Australian Stock Exchange listed gold product – however customers want to buy their precious metal, the Mint strives to service it. Is the Mint perfect? No. But everyone who works there is passionate about precious metals and supporting the industry and is proud to work there. And so am I.


  1. Good on you, mate. Solid answers to a misguided preacher of untrue stories. Let's see him dispute the facts now. He is plain out of luck.

  2. Good to know your shop has an abundant supply. I've been waiting a few weeks for the Silver I bought from Aus Bullion Co; I just called them then, there's going to be a 6 week wait on that.

    I'll give the shop a call and bank transfer some money over. Hopefully I'll be holding my silver next week ;)

  3. Well answered Bron, and with a lot more grace and decency and absent the name-calling and baseless allegations of your protagonist.

    What, no comment ?
    Time to stand up fella.
    No more cheering from the rear.
    Time to lead from the front.
    Give Nigel a call and buy the 20 tonnes. If Perth Mint won't sell, or defaults - you win.
    After all it "would still only be about $10 million worth" (your words).


  4. I find it ironic that Mr. Bron quotes the use of FUD (fear, uncertainty and doubt) by GATA and Mr. Hommel. FUD is often used by antitrust violators to monopolize markets by scaring customers away from the weaker competition. I have seen the term FUD used in legal briefs to descibe the behavior of monopolists.

    I also find it humorous that someone can seriously challenge Mr. Hommel to buy 20 tons of silver in order to prove the point of shortages of silver. While those who require 20 tons or more of silver may have access to it, I personally do not. I don't mind admitting I can't afford 20 tons of silver, and I bet everyone reading this can't either, including Mr. Hommel. Saying that quantities are available in 20 ton lots or larger is silly. There is no silver available on the retail level, and if the price continues to drop, you will see it become even more scare.

    I'm not selling my silver and will continue to buy more - assuming that I can find some for sale!!

    -- Paul

  5. Paul,
    Just making use of some Jason-style rhetoric.
    I thought it would have been readily recognizable as such.
    So, are you saying Jason can't afford $10million - I personally don't know one way or the other.
    However, if he were capable of buying, wouldn't he be able to unload it in America at a considerable profit?
    He would still win wouldn't he? (he would of course have some explaining to do to all his adoring fans, but that's another story)
    If Perth Mint defaults on the deal, he still wins.
    A win either way. How good is that?
    PS I too am on the buy side of silver, and Perth Mint keeps delivering to me 2 weeks later, every time I place an order. You should try it. No shortage here.

  6. Paul, i am not challenging Hommel to buy 20t. I am responding to the claim that silver (generic term) is not available. That is the misinformation that is being spread about.

    What I want is commentators to be specific instead of exaggerating - in other words say "there is a shortage of retail silver in the US". But then this doesn't sound as dramatic.

    Let me be clear - I do not doubt that there is a serious problem in the US right now with the supply of retail silver - that is clear from many comments on many forums. The bear market in the 1990s has shrunk the bullion distribution network and now it cannot respond. If this demand is not being met, then physcial is not being taken off the market and yes that will impact on the price. How much of an impact depends on the size of that demand versus other demand for silver.

    However, trying to hype that fact into a scare campaign about there being no silver anywhere does no one any justice.

  7. I agree that there is plenty of silver out there it just has to be dug up, refined and processed into bars.

    This is the deep storage silver/gold story used by the US Treasury to keep the unsuspecting public away from banging down the gates at Fort Knox.