Silver Stock Report
by Jason Hommel, May 17th, 2008
Kitco’s online store sells Perth Mint Certificates.
https://online.kitco.com/
The Perth Mint owns 40% of AGR Matthey.
http://www.perthmint.com.au/about_us_the_perth_mint_group_structure.aspx
If The Perth Mint is storing your metal, they admit that they may have loaned your metal out.
“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).
http://www.perthmint.com.au//documents/Annual%20Report%202007.pdf
p. 81, bottom:
“AGR Matthey has well established relationships with the major bullion banks and regularly supplies to them on a contractual basis .”
http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/refinery/value_added_bullion_product/
“An innovative treasury is as important as refining efficiency,”
http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/about_us/about_agrmatthey/
“Treasury undertakes a leasing program to either lend or borrow precious metal within the terms of a lease agreement between AGR Matthey and approved counter parties.”
http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/treasury/services/
The Mogambu Guru Writes:
“Unallocated gold is the most widely traded form of gold in the world. While this gold remains unallocated to you, the regulator considers it part of a bank’s liquid reserve.”
He figures that 99% of gold deposits are in unallocated form, and therefore all the deposited gold is, in effect, in a big commingled pile in the basement of the bank.
Another way of looking at this stunning fact is, “This makes unallocated gold an attractive way for the bank to maintain its regulated liquidity, because you have paid for your gold, and the bank is free to use your money, while it is also able to add your unallocated gold holding to its own reserve.”
http://www.dailyreckoning.co.uk/gold-investment/to-trust-or-not-to-trust.html
Ted Butler writes:
“I found it appalling that Morgan Stanley would claim to store silver that didn’t exist and even have the chutzpah to charge for the storage.”
“In fact, in the court documents summarizing the proposed settlement, one of Morgan Stanley’s defenses was that they were not doing anything unusual by charging storage on metal that didn’t exist, as this is a widespread industry practice.”
http://www.investmentrarities.com/10-23-07.html
Now you know why I say to find your local coin shop! …
Most physical silver costs about 5-7% over spot, that’s standard. Why? Risk. Silver prices can move that much in a day, and if dealers sell you their silver, they take on both price risk and default risk if they go to replace it, after selling it to you. They buy silver at about 0-1% under spot from the public, who may sell at random times. If they order from another dealer, they will have to pay that 5-7% over spot fee, and charge you about 1% over what the other dealer will charge. Again, because of risk. If you don’t like those terms, then open your own bullion shop, pay rent, find your own suppliers, risk getting robbed, and deal with crazy people who will loiter in your shop and waste your time and prevent you from trading stocks, etc.
I know you can’t always locate a shop near you with good terms, and who has any physical bullion, because the stuff is RARE!
Questions to ask an internet dealer that may live far away from you:
1. What kind of silver do you have in stock?
2. How much of that kind of silver do you have available right now?
3. How much of that do you have in your shop?
4. How long will it take to ship?
5. Will you drop ship my order from another dealer, and if so, what is that dealer’s name?
Those questions will help you discover if your dealer is honest. I will order from dealers who have to order from other dealers, but I’ll have my dealer ask the other dealer those same questions.
Any order should take 1 week to ship, or less. All orders should be shipped within a day or two after your wire or bank check arrives, and most shipping takes 3 days anywhere in the U.S., so anything longer than a week is something to worry about, in my opinion.
One time, my dealer ordered from another dealer, 100 Englehard bars. We were very specific to say Englehards only, no Johnson Matthey bars. We were very specific to ask, “How many do you have in stock” and “Are you sure you have those exact bars in stock”. They lied. They had to order elsewhere, and it took 2 weeks, and the order was shipped in several piles, and the later shipments contained JMs. That’s how I know shipping should only take one week or less — from personal experience.
Many silver bars are tarnished, blackened, dented, scratched, and quite banged up. That’s normal. They stopped making the bars long ago, and have been handled and abused many times.
It is likely easier to find and get 90% junk silver coins dated 1964 and earlier right now; they tend to trade at about spot prices, and are a bargain.
http://fidelitrade.com/ has 90%, great prices, and I’ve heard no complaints about the company.
Smaller traders might consider www.ebay.com but check the seller’s reputation.
Since many dealers are reporting shipping times of over a month, shortages abound.
If you don’t own the safe, you don’t own the contents.
If you can’t touch the metal, you don’t own it.
Do not store stuff in a bank’s safety deposit box.
Not-So-Safe-Deposit Boxes: States Seize Citizens’ Property to Balance Their Budgets (May 12th)
“California law used to say property was unclaimed if the rightful owner had had no contact with the business for 15 years. But during various state budget crises, the waiting period was reduced to seven years, and then five, and then three. Legislators even tried for one year. Why? Because the state wanted to use that free money.”
http://abcnews.go.com/GMA/story?id=4832471&page=1
Hints on storing your own silver:
1. Buy a safe of the right size. Get a lock box at an office supply store, or discount store. Next size up, get a small floor safe. Next size up, get a gun safe. Next size up, get several large gun safes. Next size up, build a vault.
2. Bolt your safe down, from the inside, to either wall studs, or the cement floor.
3. Cover your safe with a wooden cabinet, or put it in the closet, or buy a floor safe, or wall safe. Consider other hiding locations, but it’s best to hide the safe, not the bullion itself.
4. Split up your safes, put one in the house of a family or friend; you don’t have to give them the combination. Pay them a small, reasonable, rent fee of 1/2 of 1% of the bullion value, per year, or less. Or, put one in a storage shed, or storage facility.
5. Get a home security system, and/or dogs, and/or a firearm for additional protection.
6. If you live in a dangerous neighborhood, maybe move, and rent in a better location.
Sincerely,
Jason Hommel
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