I think many of you are too. The purpose of this is to RESEARCH and try and get the best information for all of us.
If this were snopes, I’d write:
“The Perth Mint has defaulted on unallocated metals…..
While the Perth Mint says they will provide unallocated in 10 days, they actually claim the metals are backed in the pipeline, and not necessarily in their vaults. If situations occur which interrupt the supply chain, Perth has let you know in disclaimers there may be additional delays to deliver your metals.“
I believe the Perth Mint has what they say, it just hasn’t been communicated all that well to all of you.
I’m writing this because it’s VERY easy for all of us to live in an echo chamber and continue to point fingers at the Perth Mint for DEFAULTING. The real question is, did they, or does our understanding of unallocated need a closer look?
Can YOU tell me what unallocated means? Is it a universal meaning, or does it vary from mint to mint?
I started out a few weeks ago talking about allocated and unallocated. I THOUGHT that allocated essentially meant there was a pile of bars, and those bars were registered to you. Then, I thought with unallocated, there’s a pile of silver there, and you have a stake on a portion of them, but not an actual bar.
Someone corrected me a few weeks back to really dig a little deeper.
So many of us think that unallocated, in a sense, is this…
A big pile of silver, and you have some ownership of this pile. A paper claim, if you will, to this pile. They pick up random bricks and hand them to you.
Now with the Perth Mint, there are claims of default right now, but these claims are somewhat being clarified as a default on the 10 day policy they had to give you the loot.
Do they have it or not?
Well……………..I think they do HAVE it, but not the answer you want to hear.
It gets a little trickier than that. You and I see a pile of silver as “backed by silver”. So….gimme. Right?
When I looked this up, the first search result came up as a blog piece from them in 2011. Essentially, when they “back with metal”, it could be somewhere in the supply chain. Not necessarily in a big pile in the vault
For example, if you buy 100 ounces of silver unallocated from Perth, they say they will buy spot and it is backed by metal. But what does “buy on spot” mean? You think they are running to the coin shop and seconds later there is metal sitting in that big pile above. If you look at their blog, it might mean they bought from a refinery, who then turns around and buys from a mine, who then needs to mine it, ship it, get it refined, and perhaps days, weeks, months later, it is in the vault. So they bought at spot with a paper claim of delivery at some point in the future, it seems. Could they even be buying a long futures claim and then stand for delivery if they need the metals? Don’t know, but this is how it sounds, if it’s not in their vault the next day.
Meaning…at any given time, the pile may actually be small AT the mint, but you are buying a part of silver in the supply chain, or “pipeline”. Where I think this gets sketchy is the pile AT the mint for unallocated seems exhausted – so they may have 60T of allocated there, and they can’t give allocated to you. If you want to convert your unallocated to allocated, it appears you may have to wait until your metal comes in from the pipeline, then they can add that to the allocated pile.
Check their own words…
It goes on further on the page I linked, but wanted to show you a screenshot.
I believe the problem here mostly is a lack of understanding of what THEY present as unallocated versus what WE THINK is unallocated.
This is what it is in reality. You call Perth Mint and buy unallocated. They call someone to buy spot, who then buys from a miner.
It then goes to the refinery
It then gets turned into metal and sent to the Perth Mint
At most issue….
This may be the ACTUAL unallocated pile at the Perth Mint that is there, ready to be taken, at any time.
But the problem is, this is where they have all of your money, in different stages, at all times.
I believe the DEFAULT here is wording which says people can have their unallocated within 10 days. Apparently, they also have all kinds of clauses to get out of this. The “bank run” if you will has been on the far right of that pic above, which took what was in the vault. They seem to have metals in the pipelines.
What I think is ALSO happening is the Toyotas of the world have top priority at the refineries, and there are only so many. If you are a COMEX bank, you also probably have top priority. The US Mint and Perth Mint I’d venture to say have the lowest priority because they are for investment demand, where industrial and banking demand most likely have priority.
Point is, I believe that the Perth Mint here is TRYING to do a solid, but getting bumped at refineries for industrial/banking, which is delaying when they can replenish the pile in the vault.
March 26, 2021 at 12:16 pm
Thanks for you explanation. I would still be interested to find out where this perceived tightness is coming from. Is it priority claims on the silver at the refiners by the COMEX banks/industry (shortage of inflow at the mint) or is as some report priority claims at the mint by COMEX banks (shortage of outflow at the mint available for retail customers). It could also be both. Also I would also still be interested to know why the mint apparently needs to lease gold that doesn’t leave the London vaults (>11 tonnes if I remember correctly).John Adams mentioned this several times. Is this gold that is officially on the books as unallocated or pool allocated when working reserves are running low?
March 26, 2021 at 12:38 pm
Good morning Nate as always thank you and very good clarification of the terms.