Perth Mint Silver Update Two Months Later: Physical Delivery Hold-ups Rise to Eight Weeks

Posted: May 23, 2008 in Your Silver Lining
Tags: , , , , ,

Perth Mint ... awfully-pretty building ... wonder if anything is in it? ... quick youtube video walk-through ought to answer that.

” If The Perth Mint is storing your metal, they admit that they may have loaned your metal out to AGR Matthey. … ‘The $880 million of precious metals deposited by Perth Mint Depository clients (note 17) was used in operations by Gold Corporation as inventory ($381 million – Note 8b) with the balance in the refining operations of AGR Matthey (Note 8a). … AGR Matthey has well established relationships with the major bullion banks and regularly supplies to them on a contractual basis.’ “

My 2-Bits: If your local grocer told you that your next order of groceries would be “delayed” by eight weeks, wouldn’t you call that a food shortage? “Delay” isn’t the first world that pops up in my mind when a company can’t deliver its main product immediately. Perhaps “Production Delay” is an Australian term which, loosely translated into American, means “Tough Luck, Buddy!” It appears these folks have loaned out a massive amount of silver to AGR Matthey (approximately 33 million ounces of silver, I’m estimating, or $500 million in today’s Aussie funny money based on the Jan 1/08 price of $15US/oz). When asked what would happen if AGR Matthey defaults? No worries, mate. Perth Mint folks assure us the Australian government (translation: Australian taxpayers) will happily pick up the tab.

Here’s a quick gander at how much your average Australian family will be pick-pocketed if AGR Matthey does an Enron-like ‘oopsy’:

  • Silver @ $18USD/oz: 33Moz = $600,000,000 owed, or about $112 per family (that’s the silver debt denominated is Austrlian dollars right now)
  • Silver @ $30USD/oz: 33Moz = $1,000,000,000 owed, or $200 per family
  • Silver @ $100USD/oz: 33Moz = $3,333,333,333 owed, or $470 per family

Of course a rising silver price only *increases* the likelihood of corporate default when the debt is payable only in silver metal. Awfully-generous folks, those Australian taxpayers, should the silver price hit the proverbial fan. When you consider after-tax income and average salaries, $470 after taxes is probably getting close to a week’s worth of work for your average hard-working Australian. So if silver goes to $100/oz and AGR Matthey defaults does that mean every Australian will be forced to serve a week’s worth of hard labour to make up for this potential boondoggle? What if silver goes even higher?

Whoda thunk the silver price dam might burst in the bone-dry Australian desert.

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