A Conversation with Bron Suchecki of The Perth Mint

71
Tue, Dec 17, 2013 - 4:44am

A few days ago I recorded a conversation with Bron Suchecki of The Perth Mint, Australia. Bron is Head of Research and Strategy at Perth Mint which can be found here: https://www.perthmint.com.au/

Bron contributes to several internet fora, including an occasional contribution of his 2 cents at TFMR. Some of his more interesting posts in the mix of fora and blogs, he adds to his personal blog here: https://www.goldchat.blogspot.ie/

Our conversation was planned to be about 20 minutes in length, but we got talking about some pretty interesting angles of the pricing of gold, and it went a little over 40 minutes in what seemed no time at all.

One of the things we talked about is the trading strategies of large financial entities, like banks and hedge funds, who manage a multi currency exposure. The interest rates of each currency, as received when their bonds are bought, is the yield of that currency in the funds' or banks' eyes, and gold is another currency to them. But gold yields no interest rate (unless you lease it away), and therefore gold is a de-facto zero coupon bond in it's own currency. Zero coupon (zero interest rate ) bonds have no yield, but their value increases from a discount at the start to full value at maturity, so their "interest yield" is included in their price, and varies as time passes. So if gold is looked at by the asset allocation team of a bond fund, these are things they pay great attention to when they compare gold with eg the JGB, TBond, or any sovereign bond. Now since bond yields (interest rates for each currency) have been traded, and/or massaged to historic low levels, this also feeds into the value of zero coupon bonds in those currencies, and into the value of gold which is a zero interest rate bond in gold.

This particular angle of the price of gold gets neglected in the PM blogosphere, who tend to regard gold much more as a high value commodity, and gold is that too. But carry cost vs yield is highly significant when it comes to who is buying and selling gold spot, or at a future delivery date. For instance, if interest rates are high, then a bank could sell gold spot (depressing the price now) and on full settlement in 2 days turn around and buy the future (raising the price later) for which a margin, not full payment is required. Then they can invest the cash raised in a higher yielding bond in some currency. This is called a carry trade. At maturity, they can roll it over, selling spot and buying future, or unwind it.

We went into this aspect of the price of gold in some depth, and also talked about several other matters too, like the Perth Mints own allocated and unallocated clients, and how their inventory is managed, the gold refining business, refining LBMA bars into Metric bars for Asia, and about the fast growing Asian exchanges' business, India and China gold.

I hope you find this video interesting and worth watching.

The video conversation with Bron can be accessed by clicking here: https://www.greenhobbymodel.com/sdcharts/AM-Bron-Suchecki-Interview-final.mp4

Resources and Links

For readers who would like to explore the interaction between currency values (including gold) and their interest rate (bond yield in those currencies) I enclose some links which provide explanation about forward contracts and spot-to-futures arbitrage here:

https://www.babypips.com/school/undergraduate/freshman-year/carry-trade/what-is-carry-trade.html

https://en.wikipedia.org/wiki/Forward_contract

https://www.sharemarketschool.com/futures-arbitrage-its-meaning/

https://www.stlouisfed.org/publications/re/articles/?id=448

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author

  71 Comments

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Just A Regular Guy
Dec 19, 2013 - 8:12pm

To Bron and Argentus

Thank you for the excellent interview! Very interesting!

Patrancus
Dec 18, 2013 - 7:30pm

Tea Party

which started for many on April 15th 2009 including yours truly, who continue to be Taxed Enough Already are still here, and are considered by demoncrat progressive marxists in both political parties and the main stream media to be their most formidable political enemies. Granted some in the republican party now consider the Tea Party more of a nuisance than a group of potential supporters for their re- elections, and be assured Tea Party knows very well who they are or maybe who they claimed to be in the last election cycle. Yes it may seem that Tea Party has been swallowed up by republicans, though I can assure you that this is not the case, if any group knows how to filter and flush the impurities from its core base of libertarian thinkers, it is the Tea Party, after all libertarian thinking was considered to be the foundation of the republican party in the first place, so who has taken over whom? or in the alternative who has decided to flush whom from its core base of libertarian thinking? If anything has happened it is that progressive republicans who hitched their wagons to Tea Party and found the taste of ownership much too bitter a pill to swallow, then in the alternative they have actually decided to spit out the Tea Party, not take it over.

As for voting in more progressive marxists in order to hasten the demise of Americas financial and economic system, well I just don't think that I could be foolish enough to accomplish that, though their are plenty of fools out there who would be fodder for that kind of action.

" While the grass may seem a bit greener on the other side of the fence, it is not necessarily easier to chew".

abguy4
Dec 18, 2013 - 1:52pm

psychopaths have a much longer time frame

After reading the link posted by DG above, I conclude that even these staggering figures are understated;

https://www.theburningplatform.com/2013/12/17/keeping-it-real/

Category 1971 2013 % Change
Average Price of New Car $3,470 $31,252 800.6%
Average Price of New Home $26,000 $245,800

845.4%

For instance in the first row, the ''price of a new car'';

In my beloved state the retail tax went from 3% to 8.5% in that time frame, AND now you require ten times the income to buy that car @ 32K , that you did @3K. So now you are in at least another 10% income tax bracket, Taking that analysis back to the chart - all the last row figures should get raised another 15% at least, so that a new car price now is at least 1000% higher. ETC.

AND, moving us all into higher tax brackets was the whole point after all. These psychopaths have a much longer time frame for their game plan than the nanosecond attention span they have conditioned us to~!

abguy4
Dec 18, 2013 - 1:35pm

Egon "god almighty" Von Greyertz

Egon "god almighty" Von Greyertz has spoken;

We can all have a Merry XMas now.

''The troubling point here is the central planners will want to push gold down to the US dollar lows because gold in all of the other currencies has already made lower lows than what we saw in late June. I’m not sure they will succeed in pushing gold to new lows, but it is irrelevant because whether the rally starts at Christmas or the beginning of 2014, next year will be the most spectacular market for gold and silver because of what’s going to happen in the world economy. ''

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/12/17_Fed_Will_Not_Taper_%26_You_Can_Expect_Chaos_After_The_Decision.html

Thanks DG

Thorusag1969
Dec 18, 2013 - 10:56am

I'd rather you held off a few years . . .

>>>The tea party has been swallowed up by the Republicans. The only thing that can help us now is a complete collapse of the existing power structure. The sooner the better I say. <<<

AG1969,

I'd rather you held off on the collapse for a few years.

I'm thinning my tree farm next year (2014), where I'll be clearcuting an acre or two for a house, a garden, some outbuildings, a wood yard, beehives, orchard etc.

Sometime in 2015 I'll get started on building a house there, and I'll establish the orchard.

In 2016, I'll be living there and can get the garden planted, the honeybees in place, the shitake mushroom operation going.

A couple years after that so I can come up the learning curve on all that stuff, and have some time to start canning and putting away some reserves, would be appreciated.

So having the disaster hold off until 2018 or later suits my personal schedule better.

To be honest, I'm not entirely sure I'll get that much time.

Regards to you, and regrets on the situation in general,

Thorus

Bugzy
Dec 18, 2013 - 9:39am
murphy
Dec 18, 2013 - 9:29am

Re Glenn Greenwald

Don't know where to post this. All I know is I like this guy A LOT! Talk about the smartest guy in the room.

"The most important thing my grandfather taught me was that the most noble way to use your skills, intellect and energy is to defend the marginalized against those with the greatest power – and that the resulting animosity from those in power is a badge of honor."

Of course, all gay teens deal with their sexuality in different ways. "One is to internalize the judgment and say, 'Oh, my God, I'm this horrible, sick, defective person' – which is why a lot of gay teens commit suicide," says Greenwald. Another, he says, is to escape the judgment entirely by creating an alternate world – "which is where a lot of gay creativity comes from because this world doesn't want you." Greenwald chose a third path. "I decided to wage war against this system and institutional authority that had tried to reject and condemn me," he says. "It was like, 'Go fuck yourselves. Instead of having you judge me, I'm going to judge you, because I don't accept the fact that you're even in a position to cast judgments upon me.'"....

After graduation, he accepted a job in the litigation department of Wachtell, Lipton, Rosen & Katz. But he found the world of corporate law "dull and soul-draining," he says. "I could not thrive or even function in a controlling institution like that. There's a huge dichotomy between people who grow up with alienation, which, for me, was invaluable, and people who grow up so completely privileged that it breeds this complacency and lack of desire to question or challenge or do anything significant. Those are the types of people who become partners at the corporate law firms."

He spent five years defending the First Amendment rights of neo-Nazis. It was one of Greenwald's prouder accomplishments as an attorney. "To me, it's a heroic attribute to be so committed to a principle that you apply it not when it's easy," he says, "not when it supports your position, not when it protects people you like, but when it defends and protects people that you hate."

Read more: https://www.rollingstone.com/politics/news/snowden-and-greenwald-the-men-who-leaked-the-secrets-20131204page=2#ixzz2nprR03v1
Follow us: @rollingstone on Twitter | RollingStone on Facebook
TJeffson
Dec 18, 2013 - 9:02am

Tell us again

How bitcoins are money..... 1200 to 450 in a couple of days .... that's stable, not. If Amazon was accepting them for actual goods, Amazon would have just taken a 60+% loss. No legitimate company will ever accept such a thing as payment for goods or services. If they do, they deserve to go out of business for being financial stupid.

Gold and Silver are money.... everything else is just a scam. A scam to enrich a few and screw everyone else.

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ag1969
Dec 18, 2013 - 8:56am

Patrancus

Your post very eloquently states the problem, only to offer the tea party as a solution to the problem. Just because there is a problem, and someone can illustrate and explain the problem, does not mean the solution they present will actually solve the problem.

The tea party has been swallowed up by the Republicans. The only thing that can help us now is a complete collapse of the existing power structure. The sooner the better I say. The corrupt assholes and criminals that occupy all parties are really starting to annoy me. Voting in Tea Party members is throwing the deck chairs off the Titanic.

Someone here was saying not too long ago that we should all vote Democrat to hasten the process of TPTB destroying themselves. I am starting to seriously consider this as a viable methodology. I think Joe Biden has the capability to bring the whole thing down in less than a week!

Patrancus
Dec 18, 2013 - 8:35am

this won't end well, and why I stack

The folks who are getting the free stuff don't like
The folks who are paying for the free stuff, because
The folks who are paying for the free stuff can no longer
Afford to pay for both the free stuff and their own stuff.

And the folks who are paying for the free stuff
Want the free stuff to stop.

And the folks who are getting the free stuff want even more
Free stuff on top of the free stuff they are already getting!

Now... The people who are forcing the people who pay
For the free stuff have told the people who are RECEIVING
The free stuff that the people who are PAYING for the
Free stuff are being mean, prejudiced, and racist.

So... The people who are GETTING the free stuff have been
Convinced they need to hate the people who are paying for the
Free stuff by the people who are forcing some people to pay
For their free stuff and giving them the free stuff in the first place.

We have let the free stuff giving go on for so long that there
Are now more people getting free stuff than paying for the
Free stuff.

Now understand this.

All great democracies have committed financial suicide somewhere
Between 200 and 250 years after being founded.

The reason?

The voters figured out they could vote themselves money
>From the treasury by electing people who promised to give
Them money from the treasury in exchange for electing them.

The United States officially became a Republic in 1776,
236 years ago.�

The number of people now getting free stuff
Outnumbers the people paying for the free stuff.

Failure to change that spells the end of the United States
As we know it.

ELECTION 2014 IS COMING
A Nation of Sheep Breeds a Government of Wolves!
I'M 100% for PASSING THIS ON !!!
For all our sake PLEASE Take a Stand!!!


Borders: Closed!

Language: English only

Culture: God, Constitution, and the Bill of Rights!

Drug Free: Mandatory Drug Screening before Welfare!

NO freebies to: Non-Citizens!

Only 86% will send this on. Should be 100%..
What will you do?

This all sounds well and good but unfortunately, as confirmed by the Senate budget vote today, the entrenched, elitist, Rhino, sellout, corrupt, Republicans are as bad if not worse than the Democrat!

Only hope for America...

THE TEA PARTY!

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