(Bring it! Perth Mint’s $715 million precious metal liability revealed!)
Silver Stock Report
by Jason Hommel, May 16, 2008
Update 2019, they never sued me!
How Desperate is Kitco?
Kitco’s President, Bart Kitner, sent to me by Federal Express, a letter which I got today, in which he demanded and threatened the following:
May 8, 2008
Mr. Jason Hommel
As I’m sure you are well aware, trust and confidence are the two most important attributes a precious metals company must earn from its customers and potential customers in order to build and maintain a successful enterprise. I have invested the last 30 years building the finest reputation for Kitco.
The libelous public allegations you published on the Internet on March 26, 2008 and April 1, 2008 have compromised these efforts and have resulted in financial damages. It is my intention to hold you responsible for the damages and loss to our reputation that these false and injurious statements and accusations have resulted in.
Every single ounce of metal that Kitco holds in an unallocated pool account on behalf of its customers is backed up by actual real metal. Providing all of the authenticated documentation needed to prove this fact in a court of law will be a simple task for us. As approved dealers of the Perth Mint who sell their certificate program, we would not risk our own reputation of carrying their product if I thought there was any possibility that they were not acting responsiblyl. There is no shortage of evidence and first hand witnesses to prove the information you have published as facts or theories have been invented. Kindly refer to the attached copy of an email sent by the Perth Mint to all of their Approved Dealers in February 08 as some such evidence.
To avoid becoming the defendant in a defamation lawsuit, I expect to see you publish a full apology and retraction using text that meets our approval. If I don’t receive a response from you or a representative of yours within ten days of delivery of this letter, then we will begin legal proceedings. That should give you enough time to do some research and get the facts. If you were hoping to gain publicity from this I can assure you that will not happen. Kitco will never publish anything negative that mentions your name or the name of your organization.
In summary, I am offering the opportunity to choose between a retraction/apology and a defamation suit.
Please govern yourself accordingly.
KITCO METALS Inc.
Bart D. Kitner
Attachment is a copy of an email from Perth Mint to distributors.
From: Nigel Moffatt
Sent: Tuesday, February 19, 2008
To: Bart Kitner, (and about 10 others)
XXX XXX XXX
Treasurer and Manager,
Perth Mint Depository
Content deleted by me, in respectful observance of the following disclaimer:
“This email, together with any attachments, is intended for the addressee only. It may contain confidential or privileged information. If you are not the intended recipient of this email, please notify the sender, delete the email and attachments from your system and destroy any copies you may have taken of the email and its attachments. Duplication or further distribution by hardcopy, by electronic means or verbally is not permitted without permission.
While every care has been taken, The Perth mint cannot be held responsible for any statistic, statement or representation made in this email. The perth Mint cannot accept liability for any loss suffered as a result of any action of any kind whatsoever taken by any perons based on information in this email.
This then, is my official reponse.
Bart Kitner, this is not about a dispute between me and you. This is about my concern for some of your customers, and how Perth Mint is treating their customers, because some of your customers and the Perth Mint’s customers are some of my customers.
Bart Kitner, you took about a month and a half to respond to my emails. Why so long? It takes me mere hours to respond to events in the marketplace. I can only assume you consulted with lawyers, who told you that there are no libelous statements in my emails, and that they would not take your case, nor write any sort of “cease and desist” or “retraction demand” letter to me on your behalf.
Checking the dates you used in your letter, I assume you refer to the following reports:
Perth Mint and Kitco Scheme Exposed March 26, 2008
Silver Shortage Drives Men Nuts March 31, 2008
I re-read my reports, and I cannot find any allegations made by me about Kitco whatsoever, let alone any libelous ones. Therefore, since you don’t list any libelous allegations, I’m at a loss to know what to retract.
So if you want me to say something, you are going to have to be more specific.
Next, I find it odd that you would rely on an email from the Perth Mint as “evidence” that says specifically to not rely on it. That email’s disclaimer is precisely what is wrong with the Perth Mint. If they want to issue reassurances to the public that they have silver available, then I would think they should do that publicly, and not through a private and confidential and unreliable email to you, that you shamefully leaked to me.
If the Perth Mint wants to leak rumors to the Internet, my reports are not the forum for that. You, at Kitco have your own forum where you can leak all the rumors you want.
And if the Perth Mint wants to buy advertising space in my newsletter, they are free to do so.
Further, I don’t see how you could possibly sue me for any damages, since the Perth letter specifically says that they want to slow down people buying silver in their programs. So, if you allege that fewer people have been buying silver through Kitco and Perth because of me, then [(edit): you would be alledging that] I’ve succeeded in doing exactly what Perth wants you to do!
I find your first statment both shocking, and telling:
“As I’m sure you are well aware, trust and confidence are the two most important attributes a precious metals company must earn from its customers and potential customers in order to build and maintain a successful enterprise.”
In point of fact, no I’m not aware of that at all. If I was asked, I would have assumed that trust and confidence were the last things needed by a precious metals company. I would have thought a reputation for honest weights and measures, and thus truth would be far more important, and these are the things I strive to cultivate in my business. I routinely tell people to not trust me, but to do their own research to confirm the things I say. The entire point of precious metals ownership is that no trust is required, since once you have the metals in your hand, you don’t need to trust anyone’s promise anymore, so I’m utterly shocked that you would think that trust and confidence are so important, unless your business model primarily requires people trusting you to hold their metals for them, which, by this admission, I suppose it does.
You know, if you really want to show people that you have silver, in today’s modern age of communication, you don’t need to rely on trust and confidence anymore at all. You can prove your faithfulness very quickly and easily in about 5 minutes. Just take a cell phone or video camera into the vaults and show all the silver that you have, and the upload the video to youtube.com and then post the link at your website. I would think that could easily answer all questions about your integrity.
While we are communicating, you might want to ask Jon Nadler to cut out the snide remarks towards investors who believe in taking delivery of silver, and towards advisors who advise taking delivery of the precious metals. That does not help your cause, but rather, exposes you.
In the meantime, I have further evidence about the Perth Mint that you may wish to consider, such as emails from my readers, which are “consumer reports” which I have the free right to publish in a land of free speech:
Hi Jason, I tried to buy silver today in Melbourne Australia,nothing at all.Ive been trying for a few weeks,The Perth mint has had nothing at all in the way of bars either,and can not tell me when they will have.Very suspect.any ideas?I enjoy your emails thanks. Best regards, Blair.
Jason, I told you that I had been trying to convert my 31,000 oz of unallocated silver at Perth Mint to allocated silver since the middle of March, and you asked to be told when this happened. The answer is the 7th of May. Mind you, I was pretty forceful with their agent so perhaps they made an exception to shut me up. So it took seven weeks of increasingly acerbic emailsfrom me to buy what they claim to be selling. Keep up the good work and God bless. John Edwards
(Jason notes: Holy smokes! It took 7 weeks just to move unallocated silver to allocated silver? And you didn’t even take delivery? Wow!)
Hi Jason, Just dropping a line to confirm all that you say about the silver shortage. I together with some friends have recently invested quite a substantial amount of money into silver and gold at the Perth mint. However, I’m awaiting a small delivery ($40 000.00 Aus$) for silver bullion for 6 weeks now and still no clue when the order will be ready. Love the product and quality of the Perth Mint is good, but just thought I will confirm what you’ve been saying all along, God only help them if we decide to transfer our certificates into physical bullion. Regards Mark, Perth, Western Australia. P.S. Thanks for a wonderful web site.
Here is a Perth Mint update — both pro and con– by an actual, ‘long term’ customer this past month.
Since 2005, I was/am a Perth MInt Certificate holder of around 24,000 unallocated ounces of silver, and some gold. I always intended to take delivery at some future point, because I believe that due to possible physical shortages of silver, actual holders of physical, deliverable metal will be able to get higher prices than holders of ‘paper silver’.
About six weeks ago, partly due to Ted Butler and Jason Hommel’s alarming articles, I asked about taking delivery. Everyone associated with the PMCs was assuring me the program was extremely safe, government backed. ASI urged me to sell the PMCs instead of taking delivery, because fabricating and shipping (to a European location) would be very expensive and time-consuming.
(Yes, it is expensive — but not even 1/3 the cost of paying long term capital gains on bullion at 28%, which nobody tells you is due when precious metals are sold!)
However, what convinced me to take delivery was discovering that the Perth Mint had just discontinued making 100 oz. bars of silver, claiming there was little demand, except from a few Americans.
And… to take delivery from unallocated metals requires that the ‘pooled’ metal be separated out and fabricated into your choice of coins or bars. These fees used to be quite reasonable. They have just increased.
Currently, the silver choices are 1 oz. coins (which now cost around $5.00 to fabricate, up from $3.00) 10 oz. bars, 1 kilo bars, and then no intermediate sizes until the 1000 oz bars (which require about $17,000 to buy at current POS). The fabrication fees to turn those unallocated oz. to deliverable 1000 oz bars has quietly TRIPLED since mid-January 08 — from $85 each to $270 each (27 cents per ounce. )
Gold fabrication fees have increased as well.
These new high fabrication fees ( and the eliminating of a silver 100 oz. bar choice) have the accidental — or not — effect of making it more inconvenient and expensive to take delivery of PMC silver, especially smaller amounts of silver between 100 – 1000 oz.
Another curve ball — since Federal Express won’t ship items in the USA over 80 lbs., 1000 oz bar deliveries in the USA have to be made by armored carriers, which cost a lot more– and they won’t go to private homes! So if you intend to take delivery in the US you will pay heavily, either by higher proportional new fabrication fees for coins or 1 kilo bars, or paying for armored trucks and a bank deposit box to deliver 1000 oz bars.
The Perth Mint now only uses an expensive private carrier for shipping, because they say that Fed Ex has lost some shipments. Or you have to make your own arrangements — we saved about $2,000 by contacting an international bonded PM shipper, but it took several international phone calls and faxes to different time zones.—————-
Here’s the good news! Once I proved determined to take actual delivery, Glen Kirsch, one of the designers of the Perth Mint Certificate Program, and executive V.P. at Asset Strategies International, helped me through the entire complex process with courtesy and gracious good humor.
My silver was fabricated and safely delivered within six weeks, with no problems or excuses.
And it could have been sooner if I had simply used Perth Mint’s shipper, becausecoordinating the various paperwork and shipping aspects took a lot of time and attention.
I also switched my unallocated pool gold at the the Perth MInt to allocated storage and am storing a numbered gold bar at their facility. (To ship that with the silver or separately would have cost around $2,000!)
———-If your clients want to participate in potential precious metal price gains, and want to eventually sell for cash, without taking delivery of any metal, then the PMC program seems like an excellent choice.
If they want to hold metals intending to eventually take delivery with a PMC, then they need to know that the guidelines and fees for fabrication and shipping can rapidly change — and it has recently become a pricey and ponderous process — but my experience has proved it CAN be done. It might be far easier to buy bullion from a reputable dealer like Glen Kirsch at Asset Strategies Internationaland store it where you want.Glen Kirsch has my highest recommendation.
Best Wishes, S.M.
My latest to Bill Murphy
Hi Bill –
Very good article on the Royal Canadian Mint gold and silver leases by Vince Byfield:
If we apply similar ratios of gold vs silver leases to the Perth Mint situation the size of the problem is increased exponentially.
For example, the Perth Mint claims to have AUS $715,000,000 (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|
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 $224,000,000 2,652,776 (17%) 221,636 (83%)
Perth Mint $622,000,000 7,159,106 (17%) 619,537 (83%)
Totals $846,000,000 9,811,882 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!
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.
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!
Oh, and Bart, while you are investigating these things yourself, can you ask the Perth Mint what their $715 million precious metal liability is all about, on page 65 of their 2007 annual report, here:
I assume that this precious metals liability denominated in Australian dollars will grow as the prices of precious metals increase, and that’s why they are asking you to not promote silver anymore. But that’s just a guess, and I’m making no allegation. Don’t trust me, click on the link to verify, and use your own head to come to your own conclusion.