The Perth Mint and Canadian Mint are apples and oranges. The Perth Mint ‘leases’
precious metals by borrowing it from pool account holders (paying no interest)
and other ’lessors’ (interest-bearing). The ‘leased’ metal is used in coin
production and lending to its 40% subsidiary AGR Matthey. This metal must
be replaced at a later date. In contrast, the Canadiam Mint takes early
possession of metal under a future purchase commitment (that is what makes it
a ‘lease’). It has no obligation to replace borrowed metal.

T.S. A third party stores precious metals with the Mint in advance of
production requirements.- Are you saying that on December 31, 2007 the
Mint was physically storing 220 thousand ounces of gold and 2.6 million ounces
of silver? Wow! That’s a lot of inventory—almost their entire previous year for
gold and 70% of 2007’s silver maple production. The Mint really needs that much
inventory? (I’m also a bit confused why they would double their gold inventory
by the end of 2007 when during that year their gold sales actually *dropped* by
6%.)

It’s technically not the Mint’s own inventory even though the Mint can and
does dip into it for production. Keep in mind, the Mint produces more than just
gold and silver Maples. In particular, the Mint will produce a substantial run
of collector items for the 2008 Olympics. Also, we are looking at a snapshot
in time so the average ‘lease’ total could very well be lower throughout the
year.

T.S. Because the Mint guarantees these metals will be purchased at a
specified future date, the third party is able to borrow funds to acquire the
bullion.- So the Mint pays all costs associated with storing and
protecting gold and silver that is physically located on their property and that
they will eventually consume but chooses not to own it.- Instead the Mint
helps someone else finance the purchase of the precious metal and until the Mint
takes possession it will pay a regular fee to this ‘owner’.

The choice not to own is based on the desire for operational leverage and
also to avoid exposure to price fluctuations. And yes, the Mint is naturally willing to
pay a fee to achieve this.

T.S. When the Mint needs the metal, it pays an agreed-upon price,
usually the spot price.- This scenario makes sense if the metals in
question are in a long-term downtrend, but in an obvious uptrend the Mint
appears to be getting shafted in every way except being guaranteed supply for
product they could probably have financed on their own. Surely, there are easier
and cheaper ways to ensure supply (like taking regularly-scheduled deliveries of
long contracts on the COMEX)?

Long-term is irrelevant, what matters is short-term price fluctuation between
the time raw material is obtained and finished product is sold. The fact is
that price fluctuations are larger in an uptrend than downtrend and this means
the Mint will actually want to do more and more ‘leasing’ as prices rise.
There is no way the Mint is ‘getting shafted’ given that it pays a negligible
fee to obtain 100% price protection and a guaranteed supply of metal. The problem
with COMEX delivery is that you can’t take a good delivery bar and put it directly
into a coin press to produce Maple Leafs. You will first need to re-melt, re-refine,
fabricate sheets, punch blanks, anneal and burnish (I probably missed
a few steps). Between taking delivery on the COMEX and getting raw blanks ready
for striking, the metal price can move by a lot.

T.S. This payment is actually made AFTER the metal has been fabricated
and sold as minted product, thus the ‘purchase and sale of metals used in these
products are completed on the same date, using the same price in the same
currency’. - So the bookkeepers job is easier. Big deal. It sounds like
this little convenience is costing the Mint, well ‘A MINT’. The Annual Report
states many times that they believe silver to be in a long-term uptrend—hence
the investment in a new refinery dedicated to silver production and the new
scrap silver initiatives. By purchasing futures on the COMEX they would (a) pay
no lease fees at all, and (b) purchase silver at present-day rates which (based
on their stated uptrend belief) should on the whole be significantly lower than
the spot rate on the day they eventually take delivery. Isn’t this is how other
large commercial commodity consumers ensure regularity of their supply and the
original raison d’etre for the futures market? Why the Mint goes for these lease
deals instead still baffles me.

You are grossly overstating the cost and understading the benefits of the
Mint’s ‘leasing’ program. Your ’super’ idea would result in financial disaster the
first time there is a major correction in the
metal price. Besides, the Mint has no mandate to speculate on rising metal prices. In fact,
‘other large commercial commodity consumers’ have arrangements very similar to, if not exactly like,
the Canadian Mint. The fact you are baffled is a very good indication you should keep
blogging and not apply for a decision-making position at the Mint or any similar
entity where raw material price controls are critical.

T.S. An important point is that by storing the bullion with the Mint,
the third party insulates the Mint from claims of possession or confiscation,
abnormal market conditions and other risks.- And in an uptrend this
‘third party’ pockets a whole lot of money in the process (both in capital gains
and rent). I must confess, this whole process sounds really bizarre to me, Tom.
Let’s pretend for a moment that you leave a million bucks at my home—it’s yours,
but I’ll just keep it for you – I’ll eventually buy it from you, but in the
meantime I’ll just hold it for you. I’m the lessee in this scenario and you’re
the lessor. Then, oops, it’s gone. (Sorry Tom–No hard feelings?) You’re telling
me that I, the lessee, am insulated from any claims of possession or
confiscation? I’m the custodian! I’m pretty sure you would be mad as hell at me
for losing the money and, maybe, just maybe, you would put a caveat or two in
the agreement so that I, the lessee am liable for monies lost while in my care.
If you don’t think such caveats are necessary or ‘appropriate’, feel free to
drop by with that million anytime, Tom.

The third party is likely hedged as well and thus it is speculators
who will get the ‘capital gains’ assuming metal prices rise during the
term of the ‘lease’. Your example of me leaving money at your home is pure hyperbole because
I can deposit that money at a bank and earn interest (are you accusing
me of being the stupidest person on Earth?) This is precisely what the lender
of the ‘leased’ metal is doing by ‘depositing’ bullion with the Mint. As for
‘claims of possession or confiscation’, this is not a concern for the ‘lessor’
since a future sale is contractually guaranteed and the Mint is an ideal counterparty.
Rather, the Mint is the one who should be concerned when metal it has contracted
to receive in the future is not in its own possession, since the ‘lessor’ can
default (including through no fault of its own) and then the Mint will have no metal but
merely a ‘claim’.

T.S. In addition, the Mint is able to have plenty of inventory on hand
without having to pay for it in advance or carry it on the books.-
Without having to pay for it? I thought you said they’re paying lease fees. It
sounds like Joe Schmo can go to the Brick, pay no money down and no interest for
a year using a mediocre sofa as collateral, but the Royal Canadian Mint’s credit
is so bad it can’t cut a similar deal with any bank in the land using
(literally) solid gold as security? Amazing.

Paying a negligible lease fee is a far cry from paying 100% and tying up
capital. Under the ‘lease’ the Mint doesn’t have to pay until it has actually
sold the finished product (because the Mint extends payment terms up to 60 days, it is already financing a portion of its operations). If it were able to borrow money substantially below LIBOR and interest rates were very high, the answer might be different and maybe the “leasing” wouldn’t make sense. But there would still be the issue of buying and selling the metal at a price that GUARANTEES a unit profit. Sorry,
but Joe Schmo cannot get such a deal.

T.S. Finally, this transaction does NOT result in any other type of
obligation (such as a ‘Gold Debt Obligation’ or ‘Silver Debt
Obligation’).- Hmmm. Let’s see now. Must store gold. Must protect gold.
Must provide commitment to eventually buy gold (I guess the lessor’s credit is
good, but the Mint’s isn’t.) Must pay ‘rent’ on gold in the interim. Must pay
whatever the future spot rate is for gold. You’re right! Other than those
niggly-piggly responsibilities there’s no commitments at all. Heck, they may as
well take it out the section of the report they’ve got it in, since it’s called
‘Commitments and Guarantees’.

Congratulations, you have come up with a partial list of the contractual obligations that are
inherent part-and-parcel of the ‘lease’. This does not, however, mean they are ‘debt’
obligations or any other types of obligations other than ‘commitments’ to buy
a given quantity of metal at a future date and a future price, the benefit of which is to protect
the Mint from price fluctuations and supply disruptions. The only reason
these ‘commitments’ are mentioned in the financial statements is that they may
become future liabilities should the Mint not produce sufficient product to
acquire the amount of metal underlying these ‘leases’.

Having said all this, it is possible that under U.S. accounting standards
the Mint’s ‘leases’ would be considered balance sheet obligations if the risks
and rewards of ownership are transferred to the Mint contractually at the
point the Mint takes delivery. Still, this would be only a cosmetic difference
since an offsetting asset would also be required at a corresponding amount.

1. Why would a third party need to be involved in the first place?

2. If the Mint promises to ‘purchase’ bullion at a later date, but tells this
third party to hang on to it until they need it, why do they call it a lease if
they’re purchasing it?

The definition of a lease isa contract by which one conveys real estate,
equipment, or facilities for a specified term and for a specified rent.

As per the above comments by Tom: ‘When the Mint needs the metal, it pays an
agreed-upon price, usually the spot price.’

Ok, so doesn’t that mean they’ve bought it free and clear? Unless they’re
borrowing bullion from this third-party to sell before the Mint gets their own
bullion to sell, it doesn’t make much sense to be calling it a lease.

A third party is required because the Mint cannot accomplish the goal of
protecting against price fluctuations and supply disruptions using a ‘covenant
with God’ or other means. Even if the Mint tried to replicate a ‘lease’
by going directly to forward suppliers, the COMEX, etc. it would technically
be dealing with third parties. The difference is that going at it alone is not
really an option due to the complicated requirements. That is why we have metal
trading desks at bullion banks, love ‘em or hate ‘em.

You are wrong that the Mint ‘tells this third party to hang on to it until
they need it’. WHY WOULD THE MINT DO THAT??? In fact, the Mint insists
on taking delivery. Because it does so in advance of making payment, the contract
is called a ‘lease’. Whether this meets the traditional definition of ‘lease’
is a matter of semantics that has no bearing on the discussion.

So one must ask the question, why would the Perth Mint lease almost four
times *more* silver and gold than the Canadian Mint if the main reason for
leasing is mainly to ensure inventory for future production? Using Tom’s
rationale above it appears that the Perth Mint has now decided to pay rent for
the next *three years* of future production. Wow! Is it really plausible that
the Perth Mint likes to be so cautious to the point of paranoia?

As I noted above, the Perth Mint is not ‘leasing’ in the same sense as the
Canadian Mint. The Perth Mint borrows metal from pool account holders and through ‘metal
leasing’ in the typical sense, and then delivers most of this metal under
separate ‘metal leases’ to its 40% owned subsidiary AGR Matthey. Only a portion
of the ‘leased’ metal is used in the mint’s own operations. Unlike the Canadian Mint,
the Perth Mint does not appear to be averse to maintaining excess working capital reserves
or having some exposure to price fluctuations (no doubt because AGR Matthey, a company owned in part by private concerns, manages Perth Mint’s hedging programs). In fact, the Perth Mint refers to the
difference between sales and cost of sales as ‘trading profit’! It is perhaps
instructive, then, to observe that it has inferior profits (trading or otherwise) compared to the safety-minded Canadian Mint despite similarly situated operations and a long-term uptrend
in precious metal prices.

I would posit that it is possible that these precious metal leases do not
entirely represent actual physical inventory in the current custody of the mint.
A quick audit to see if the physical metal is in fact there should put the
matter quickly to rest.

None of the amounts noted as ‘precious metal leases’ in the Perth Mint’s
financial statement are ‘actual physical inventory in the current custody of
the mint’ since the disclosures clearly state these precious metals are
held at AGR Matthey under separate ‘leases’.

In the case of Canada’s mint, according to the telephone conversation
slopetester attests to above with David Madge, RCM’s Marketing Director, the
lion’s share of silver maples is being sold overseas (80%) — so if these leases
do *not* represent physical inventory (that, according to Tom, the Mint has
bizarrely opted to leave titled to someone else) then 80% of the physical wealth
is being shipped outside the country and Canadian taxpayers are being left on
the hook to the tune of tens, potentially hundreds, of millions of dollars.

This is all wrong. The Mint is merely in possession of the metal under
‘lease’. Title is irrelevant since it will pass by contract to the Mint and
then immediately to the buyer when the finished product is sold. The Mint never
owned the metal and neither did the Canadian taxpayer, so no wealth is being
shipped out of the country as a result of foreign sales constituting 80% of
Maple production. The proper and sensible way to look at this is that the Mint
is generating income from the mintage of the Maples, but not from price fluctuations.
As such, the Mint is generating income to the account of Canadian taxpapers
rain or shine. If Canadian taxpayers would like their government to engage in
precious metals speculation, I’m sure they can impose their collective will
and make it happen.

In light of the Perth mint numbers it appears to be very possible that these
leases are, in fact, being rolled over and cumulating and that the physical
inventory is for the most part gone, leaving the most toxic of liabilities with
both mints: a commitment in the future to supply precious metals that are
rapidly rising in price and dwindling in terms of availability.

There is no basis to make this conclusion in the case of the Canadian Mint.
It has NO COMMITMENT IN THE FUTURE TO SUPPLY PRECIOUS METALS. At worst, the
Canadian Mint is exposed to a commitment to purchase an excessive
amount of precious metals should its mintage needs fall short. Resulting losses
could be minimized by the immediate sale of excess precious metals or by a direct
hedging program. The Mint may also need to borrow funds from Ottawa on an emergency
basis to pay for the metals as ‘leases’ come due. By contrast, the Perth Mint
does have some risk in its precious metal minting operations, including the
risk of ‘trading’ losses arising from falling precious metal prices.
Yet given that the Perth Mint’s ‘leases’ are ENTIRELY with AGR Matthey,
one of the world’s largest gold refiners, I really doubt ‘the physical inventory
is for the most part gone, leaving the most toxic liabilities’. It is technically
true, nonetheless, that should AGR Matthey go bankrupt for some reason, it may
not be able to return borrowed metal to the Perth Mint, and then presumably
the Government of Western Australia would need to come to the rescue.

Well Done!!!

Sure we may have already seen what was predicted in ‘03 (with us seeing $21/oz.) but I have yet to see $30-$200/oz. like some had predicted back in 2003.

I agree that buying and possessing physical silver is a great investment (and a fun hobby), however I don’t know if I’ll believe what the “bulls” say until it happens.

Yes it may go up…yes it may go down…there’s no way to tell when or by how much, so why even bother with a prediction?

In my eyes, they’re just giving us some hope that it eventually happens. Whether or not it does, that’s another story.

How important is the silver issue?

Read this.

Bix

http://www.silverbearcafe.com/private/silvermystery.html

Under a section entitled “The Year in Brief” the 2007 Perth Mint Annual Report states: “Coin, medallion and bar sales added value to 4.75 tonnes of gold, 69.82 tonnes of silver and 30 kilograms of platinum.”

At 32150 troy ounces to the tonne that’s 152,712 ounces of gold and 2,244,713 ounces of silver sold in calendar 2007. These number are actually therefore substantially *less* than the Canadian Mint equivalents.

So one must ask the question, why would the Perth Mint lease almost four times *more* silver and gold than the Canadian Mint if the main reason for leasing is mainly to ensure inventory for future production? Using Tom’s rationale above it appears that the Perth Mint has now decided to pay rent for the next *three years* of future production. Wow! Is it really plausible that the Perth Mint likes to be so cautious to the point of paranoia?

I would posit that it is possible that these precious metal leases do not entirely represent actual physical inventory in the current custody of the mint. A quick audit to see if the physical metal is in fact there should put the matter quickly to rest.

In the case of Canada’s mint, according to the telephone conversation slopetester attests to above with David Madge, RCM’s Marketing Director, the lion’s share of silver maples is being sold overseas (80%) — so if these leases do *not* represent physical inventory (that, according to Tom, the Mint has bizarrely opted to leave titled to someone else) then 80% of the physical wealth is being shipped outside the country and Canadian taxpayers are being left on the hook to the tune of tens, potentially hundreds, of millions of dollars.

In light of the Perth mint numbers it appears to be very possible that these leases are, in fact, being rolled over and cumulating and that the physical inventory is for the most part gone, leaving the most toxic of liabilities with both mints: a commitment in the future to supply precious metals that are rapidly rising in price and dwindling in terms of availability.

The more I look into this the crazier it gets.

1. Why would a third party need to be involved in the first place?

2. If the Mint promises to “purchase” bullion at a later date, but tells this third party to hang on to it until they need it, why do they call it a lease if they’re purchasing it?

The definition of a lease is
a contract by which one conveys real estate, equipment, or facilities for a specified term and for a specified rent.

As per the above comments by Tom: “When the Mint needs the metal, it pays an agreed-upon price, usually the spot price.”

Ok, so doesn’t that mean they’ve bought it free and clear? Unless they’re borrowing bullion from this third-party to sell before the Mint gets their own bullion to sell, it doesn’t make much sense to be calling it a lease.

Maybe I’m not really clear on how it all works (since I’m not a silver-buff) but being a fan of silver, I am finding this topic quite interesting.

T.S.> A third party stores precious metals with the Mint in advance of production requirements.
- Are you saying that on December 31, 2007 the Mint was physically storing 220 thousand ounces of gold and 2.6 million ounces of silver? Wow! That’s a lot of inventory—almost their entire previous year for gold and 70% of 2007’s silver maple production. The Mint really needs that much inventory? (I’m also a bit confused why they would double their gold inventory by the end of 2007 when during that year their gold sales actually *dropped* by 6%.)

T.S.> Because the Mint guarantees these metals will be purchased at a specified future date, the third party is able to borrow funds to acquire the bullion.
- So the Mint pays all costs associated with storing and protecting gold and silver that is physically located on their property and that they will eventually consume but chooses not to own it.
- Instead the Mint helps someone else finance the purchase of the precious metal and until the Mint takes possession it will pay a regular fee to this ‘owner’.

T.S.> When the Mint needs the metal, it pays an agreed-upon price, usually the spot price.
- This scenario makes sense if the metals in question are in a long-term downtrend, but in an obvious uptrend the Mint appears to be getting shafted in every way except being guaranteed supply for product they could probably have financed on their own. Surely, there are easier and cheaper ways to ensure supply (like taking regularly-scheduled deliveries of long contracts on the COMEX)?

T.S.> This payment is actually made AFTER the metal has been fabricated and sold as minted product, thus the “purchase and sale of metals used in these products are completed on the same date, using the same price in the same currency”.
- So the bookkeepers job is easier. Big deal. It sounds like this little convenience is costing the Mint, well “A MINT”. The Annual Report states many times that they believe silver to be in a long-term uptrend—hence the investment in a new refinery dedicated to silver production and the new scrap silver initiatives. By purchasing futures on the COMEX they would (a) pay no lease fees at all, and (b) purchase silver at present-day rates which (based on their stated uptrend belief) should on the whole be significantly lower than the spot rate on the day they eventually take delivery. Isn’t this is how other large commercial commodity consumers ensure regularity of their supply and the original raison d’etre for the futures market? Why the Mint goes for these lease deals instead still baffles me.

T.S.> An important point is that by storing the bullion with the Mint, the third party insulates the Mint from claims of possession or confiscation, abnormal market conditions and other risks.
- And in an uptrend this “third party” pockets a whole lot of money in the process (both in capital gains and rent). I must confess, this whole process sounds really bizarre to me, Tom. Let’s pretend for a moment that you leave a million bucks at my home—it’s yours, but I’ll just keep it for you – I’ll eventually buy it from you, but in the meantime I’ll just hold it for you. I’m the lessee in this scenario and you’re the lessor. Then, oops, it’s gone. (Sorry Tom–No hard feelings?) You’re telling me that I, the lessee, am insulated from any claims of possession or confiscation? I’m the custodian! I’m pretty sure you would be mad as hell at me for losing the money and, maybe, just maybe, you would put a caveat or two in the agreement so that I, the lessee am liable for monies lost while in my care. If you don’t think such caveats are necessary or ‘appropriate’, feel free to drop by with that million anytime, Tom.

T.S.> In addition, the Mint is able to have plenty of inventory on hand without having to pay for it in advance or carry it on the books.
- Without having to pay for it? I thought you said they’re paying lease fees. It sounds like Joe Schmo can go to the Brick, pay no money down and no interest for a year using a mediocre sofa as collateral, but the Royal Canadian Mint’s credit is so bad it can’t cut a similar deal with any bank in the land using (literally) solid gold as security? Amazing.

T.S.> Finally, this transaction does NOT result in any other type of obligation (such as a “Gold Debt Obligation” or “Silver Debt Obligation”).
- Hmmm. Let’s see now. Must store gold. Must protect gold. Must provide commitment to eventually buy gold (I guess the lessor’s credit is good, but the Mint’s isn’t.) Must pay ‘rent’ on gold in the interim. Must pay whatever the future spot rate is for gold. You’re right! Other than those niggly-piggly responsibilities there’s no commitments at all. Heck, they may as well take it out the section of the report they’ve got it in, since it’s called “Commitments and Guarantees”.

It’s the wee hours now, so I’ll address the other points you raise another time. Tom, all kidding aside, I really am grateful for your efforts to shed light on this (IMO) quite complicated topic. Thanks again!

For example, the Perth Mint claims to have AUS $715M (about US $622M on 1/1/08) of precious metal leases on page 65 of the 2007 annual report: http://www.perthmint.com.au/about_us_the_perth_mint_annual_reports.aspx

The Perth Mint says most of these leases are to AGR Matthey for inventory purposes BUT AGR Matthey has a “Treasury” function which facilitiates:
Sales and Purchases of precious metal 
Location Swaps 
Leasing, Consignment Stock and Funding Facilities 
Price Hedging 

http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/treasury/about_treasury/

If we apply the same gold/silver ratios to the Perth Mint as was discovered in the Canadian Mint leasing operations the conclusions are almost 4x as large.

Total $ Leases Silver oz Leased Gold oz Leased

Canadian Mint Total Leased=$224,000,000 Silver oz=2,652,776 (17%) Gold oz=221,636 (83%)

Perth Mint Total Leased=$622,000,000 Silver oz=7,159,106 (17%) Gold oz=619,537 (83%)

Total Leased by both=$846,000,000 total Silver oz=9,811,882 oz Total gold oz=841,173 oz

I wish I had the Kitco leases to add to these but those are under “Super Secret Security” ( as the Mogombo Guru would say….aka “SSS”) by Kitco’s “#1 Man of Mystery”….Mr. Jon Nadler.

Of course, these are very rough estimates and does not provide concrete evidence that any of these leased oz are being used in the suppression operations of the manipulators BUT it does provide better clarity in the very cloudy practice of precious metal leasing.

Now let’s look at WHO may be responsible for the size and scope of the unallocated metal leasing scam….WELL THERE HE IS AGAIN!

Looks like our friend Jon Nadler has talked The Royal Canadian Mint into setting up their own “Unallocated Pooled Accounts” also!

https://online.kitco.com/rcm/introduction.html

Well we know ole’ Jonny boy got his feet wet on gold market manipulation from HSBC and Bank of America before he brought his “Unallocated Pooled Account” program to the Perth Mint, then Kitco, and now The Royal Canadian Mint.

http://www.ibtimes.com/forex/forexperts/biography/jon-nadler.htm

No wonder their gold leasing is going through the roof at the Perth Mint and the Royal Canadian Mint…and likely at the privately held Kitco!

VERY, VERY interesting to note that Mr. Nadler also “consulted on marketing and product development issues” for The US Mint…. NOT THEM TOO!

The insanity never ends!

Bix

Did neither Ted Butler nor Jason Hommel explain to you how this works? A third party stores precious metals with the Mint in advance of production requirements. Because the Mint guarantees these metals will be purchased at a specified future date, the third party is able to borrow funds to acquire the bullion. In addition, the third party also hedges its own price risk by entering into a forward purchase. Alternatively, the contracted third party “leases” the bullion from another (non-contracted) third party. In either case, the Mint pays a “lease” fee. When the Mint needs the metal, it pays an agreed-upon price, usually the spot price. This payment is actually made AFTER the metal has been fabricated and sold as minted product, thus the “purchase and sale of metals used in these products are completed on the same date, using the same price in the same currency”. An important point is that by storing the bullion with the Mint, the third party insulates the Mint from claims of possession or confiscation, abnormal market conditions and other risks. In addition, the Mint is able to have plenty of inventory on hand without having to pay for it in advance or carry it on the books. Finally, this transaction does NOT result in any other type of obligation (such as a “Gold Debt Obligation” or “Silver Debt Obligation”).

# Can the Mint provide unequivocal assurances that bullion being entrusted to them for storage and safeguarding is not being leased, borrowed or impinged upon in any way?

The “leased” bullion is being stored at the Mint by a contracted third party with the express purpose of having the Mint purchase it at a specified future date. Besides, it would be appropriate only for those actually entrusting the Mint to request such assurances.

# To ease any sense of misappropriation, will the Mint release as soon as possible an inventoried list of all bars currently stored, complete with serial numbers, corresponding refiners and individual ingot weights for all allocated bars entrusted to it for safekeeping (as Barclay’s commodity ETF for silver, SLV, fully revealed, bar by bar, within days of Analyst Ted Butler’s request)

In this case, such a request is not reasonable as it would violate the right to privacy of those storing bullion with the Mint. And despite Ted Butler’s claims that Barclays’ ETF released a bar list based on his request, it was a demand by ACTUAL CUSTOMERS of Barclays that likely prompted them to finally ask the Bank of New York to provide such a bar list despite the fact it was not part of their service agreement. Ted Butler overstates his important–but not unique–contribution.

# What steps has the Mint taken to ensure the legal owners of the bullion being leased are fully aware and have consented to said leasing arrangement?

It would be impossible to carry out the “leasing arrangement” without the knowledge of the “lessor” since there is an actual contractual arrangement signed by both parties not to mention the payment of “lease” fees and the eventual purchase of metal subject to the “lease”.

# And finally, please explain how leasing (by their own admission) rapidly-escalating precious metals is a sound financial policy?

It is sound because metal supply can be disrupted and prices can fluctuate wildly during periods of “rapidly-escalating precious metals”. This is precisely the time you want to have metal available immediately, in your own possession. Otherwise, there could be delays between purchase and delivery to the Mint’s facilities and thus an exposure to price risk.

Yours Sincerely,

Adrian Burridge
CanadianInvestors.com

That’s probably closer to what an ounce should be right now. Strap on your seatbelts, when this thing picks up steam we are going to go PARABOLIC. Every rock you look under there’s another silver conspiracy. And in fact, the conspiracy against silver is one of the oldest, dating back to the early 19th century. This cabal will not stop until every remaining ounce of deliverable silver is used up. Then the price of silver will hit triple digits, then it will surpass palladium, then it will surpass gold, then it will surpass platinum, then they still will have not found any substitutes for it…

It sounds to me as if the CPM folks are about two years behind the times: According to the 2006 Annual Report (page 45/47) and 2007 Annual Report (49/51) Silver Maple Leaf Production was as follows for the following years:

2005: 955,694
2006: 2,464,727
2007: 3,526,052

Company Annual Reports can be found on the Mint’s website going back as far as 2001.
( http://www.mint.ca/royalcanadianmintpublic/index.aspx?RequestedPath=/en-ca/theroyalcanadianmint/annualreport/default.htm )