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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delacroix
Dec 17, 2013 - 10:35pm

john ing article

daystar did you read that john ing piece? he stated that the fed had to borrow more money, and that yellen was slotted for the treasury. it bothers me when supposed professionals, make these kind of erroneous statements.

tyberious
Dec 17, 2013 - 10:16pm

“The issue which has swept

“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.” ― John Emerich Edward Dalberg-Acton

tyberious
Dec 17, 2013 - 10:13pm

@dgstage

Good shit! Notice how the CPI is almost equal to wages, average earnings, and wage per worker. Hey why arent the PM's in there? Oh I know why, because they are sooo under valued!

dgstage
Dec 17, 2013 - 9:59pm

Keeping it Real

From the burning platform.

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%
Gallon of Gasoline $0.36 $3.50 872.2%
Natural Gas $0.35 $4.00 1042.9%
Loaf of Bread $0.20 $2.20 1000.0%
Sirloin Steak per pound $1.19 $7.00 488.2%
Dozen Eggs $0.25 $1.90 660.0%
Box of cereal 12 oz $0.36 $3.50 872.2%
Pack of Cigarettes $0.32 $6.00 1775.0%
College Tuition – Private $1,832 $30,094 1542.7%
Monthly Rent $150 $1,073 615.3%
Baseball ticket – Phila $2 $23 1050.0%
Movie ticket $1.50 $9.00 500.0%
Maximum Social Security Tax $406 $8,950 2104.4%
Median Household Income $9,028 $51,017 465.1%
Median wage per worker $6,497 $27,519 323.6%
Average Hourly Earnings $3.60 $20.31 464.2%
CPI 40.5 232.0 472.8%
Consumer Credit Outstanding (tril.) $0.14 $3.07 2092.9%
Mortgage Debt Outstanding (tril.) $0.51 $13.18 2484.3%
silver66tyberious
Dec 17, 2013 - 9:56pm

Freaky--tyberious and JY896

57goldtop and I went out for lunch today and were discussing this topic(one of many I might add) over bbq chicken and diet fries.

Thanks for posting

Silver66

tyberious
Dec 17, 2013 - 9:44pm

@JY896

«Dragon Family Gold» and US Federal Reserve System (I)

The attacks against world leading financial institutions have become more frequent recently, for instance the legal claim lodged by the anonymous group code-named the Dragon Family. Some Neil Francis Keenan is acting as its representative. On November 23, 2011, he filed a 111-page complaint with the U.S. District Court in the Southern District of New York, that was accepted to consideration. He is represented by William H. Mulligan Jr., with Bleakley, Platt & Schmidt of White Plains, N.Y.

Keenan claims that before WWII the U.S. the Federal Reserve System (12 Federal Reserve Banks, to be more exact) had received enormous amounts of money – delivered in gold and other precious metals – from a group of several wealthy Chinese citizens to be kept for a long time. In return they got certificates testifying the money was placed for the benefit to be redeemed by Federal Reserve System on the expiration of specified term… The deal is murky concerning such details as the term of maturity and the amount of the sum transferred. It’s also vague about what kind of deal it was, was money to be kept, stored or deposited in the bank? Or was it a Federal Reserve Banks registered capital investment? It’s worth to note the papers are called differently: notes, bonds and certificates, it’s crucially important for clear understanding the essence and mechanism of the transactions in question. It’s not clear how the gold was transferred. Was it a one-time, many-time or recurrent transaction? In short, it leaves a lot of questions unanswered. The complaint itself doesn’t provide answers, but rather gives rise to a lot of new questions. There is a special American term for such complaints – «false claims». Back then President Bush Jr. brought up the issue of cleaning the US courts from «false claims», but to no avail. The lawsuits may be related to inconceivable claims, and in case of money adjustments the sums happen to be of many zeroes. Perhaps, it’s a good business for US legal system. Sometimes false claims become golden claims for claimants. According to experts, the courts write off around $240 million annual writs of execution. I don’t exclude the Dragon Family lawsuit is a false one, though I suggest one should not jump to conclusions. The defendants include the US Federal Reserve System, the United Nations, the Office of International Treasure Control (OITC), the World Economic Forum, USA Inc., (US branch of World Economic Forum), the Italian Financial Guard and well known politicians, for instance: former Italian Prime Minister Silvio Berlusconi and UN General Secretary Ban Ki-Moon. The Italian Republic is also in the list. There is one more defendant – Some Daniel Dal Bosco (a Vatican banker, an associate member of P2 Masonic lodge), who is accused of stealing from Neil Keenan a bunch of bonds entrusted to him by the Dragon Family. The total sum of the stolen bonds is $144,5 billion. The total sum of lawsuit is $1.1 trillion in financial instruments…

https://www.strategic-culture.org/news/2012/12/08/dragon-family-gold-and...

https://news.google.com/newspapers?nid=1499&dat=19390228&id=GhgaAAAAIBAJ...

Golden Trust of Chiang Kai-shek https://english.arthur-stern.de/

These scanned copies were made from the original bond series of 1934,

No. D 04143737 A valued US $ 100.000.000.

On the ground of the irrefutable facts there was established that

in November 1933, the Chinese leader Chiang Kaishi secretly handed over to the U.S. president Franklin Roosevelt stolen gold fund of Chinese monarchical dynasties. The treasures were collected from the 4th century (BC) until the early 20th century. Gold masterpieces were located in Beijing, the Forbidden City, which was the residence of Chinese emperors, until the Chinese revolution in 1911. Now it is the Gugun Chinese National Museum.

The treasures were hidden by Chiang Kaishi to avoid nationalization. Chiang Kaishi illegally appropriated the gold. These were masterpieces of jewelry and their value and beauty exceeded treasures of the Hermitage, the Louvre and the Pyramids of Egypt put together.

Under a special secret the gold was sent in 13.11.1933. from Shanghai to San Francisco on an American heavy military cruiser “Houston“. This transaction was arranged for a bearer through the U.S. Federal Reserve and Chiang Kaishi personally received a trust in the amount of $US 25.000.000.000. (Nr. SC1226-71-B004 ; D 04143701 A) The trust was designed by a financier and advisor of President Roosevelt - Mr. Bernard Baruch.

President Roosevelt did a multi-billion dollar issue during the Great Depression under the guarantee of stolen gold reserves of China. Thus, he solved the problem of economic crisis and secretly financed military and industrial complex of Hitler to inciting World War II.

In 1937 Chiang Kaishi was forced to give the trust to Joseph Stalin in exchange for his son's life, Chiang Chingo (later the president of Taiwan island), who was the hostage. Guarantee certificates and a few bonds were stolen by a Soviet secret police officer during transfer of the trust. The whole investigation team dealing with the arrest of Chiang Chingo was shot by the NKVD after his departure to China. (The securities were hidden in the USSR for a long time and therefore the bond could not be repaid until 12/31/1964).

The sovereignty of the island of Taiwan in 1950 and its protectorate of the United States were established to exclude the return of treasures to the mainland China. The sovereignty of Taiwan and its statehood provide the legal basis for the United States not to return the treasures to the mainland China since the PRC was founded 16 years after the theft of treasures from the Republic of China. (now Taiwan island).

The stealing of chinese treassures is irrefutable and established.

The cost of the stolen treasures as of September 2011 considering the "golden linkage" amounts to approximately USD 1.357.142.857.140. The interest exceed one trillion dollars.

The USA has no ownership rights to these treasures. The return of the stolen propety of China is possible only by its reunification with Taiwan!

You can find the detailed information about the biggest stealing and fraud of the latest century in my study „The Goldtrust of Chiang Kaishi“ and „Black box of Pandora“, which was carried out on the ground of the genuine documents and facts.

https://english.arthur-stern.de/index.php?look=1218370604

Kuomintang sued in U.S. court for recovery of stolen assets

International law expert Jonathan Levy has announced the filing of a lawsuit in U.S. District Court against the business managers of the Kuomintang ruling party of the Republic of China in-exile to recover stolen assets.

More Photos

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Plaintiffs in the lawsuit are the Taiwan Civil Rights Litigation Organization and two bondholder partnerships, Fort Night Holding and Pacific Sentry Associates.

Levy explains the case, "Holders of Chinese bonds issued from 1895-1942 which are all in default since 1949 are taking on the former masters of Nationalist China-the Kuomintang."

"Prior to the 2000 election of Chen Shui-bian to the presidency of the Republic of China on Taiwan, the Kuomintang of Generalissimo Chiang Kai-shek ruled Taiwan with an iron fist and expropriated billions of dollars in assets including gold and collateral, some earmarked to redeem defaulted bonds."

The federal complaint, brought in the Northern District of California, charts the convoluted history of a number of bonds issued by the Chinese, all of which have been defaulted by a series of decisions made by the Republic of China under Kuomintang control.

DayStar
Dec 17, 2013 - 9:39pm

Harvey's Up! (TFMR)

  • Jim Willie: THE REALITY IS THE USFED IS MONETIZING AT LEAST $200 BILLION PER MONTH, MORE THAN DOUBLE THE OFFICIAL VOLUME STATED AND ADMITTED. The USFed is monetizing much more than basic USTreasurys and USAgency bonds to cover the USGovt deficits, their rollover refunding, and the raft of mortgage bonds. The USFed is monetizing a small mountain of Fannie Mae bonds and collateralized debt obligations with a mortgage core, which went bad, turned worthless. The USFed is monetizing a large mountain of interest rate derivatives that went deeply in the red in the last year, especially this past summer during the self-inflicted Taper Talk disaster. The mortgage debt and its leverage toxic vat amounts to a few $trillion yet to be fully monetized. Furthermore, the interest rate derivatives amount to hundreds of $trillion yet to be fully monetized. This hyper inflation output does not hit Main Street, which would result in price inflation for products and services. Worse, this hyper inflation output wrecks the USDollar and its primary vehicle the USTreasury Bond. It burns the King Dollar throne. The United States is Greece times one hundred. The winner will be the Gold Market. The loser will be the United States, the United Kingdom, and Western Europe. These regions will tiptoe into the Third World if lucky, and fall head first into the Third World if not careful. They should have thought more fully about the Chinese Most Favored Nation pact back in 1999. The low cost solution as center piece to globalization effectively destroyed the Western economies, by removing the industrial core. It was far more carefully planned than the great majority of people believe. The ultimate goal in my opinion was to wreck the cradle of capitalism in the United States.
  • Eric Markowitz (Inc.): The quest for mainstream Bitcoin acceptance hit a potentially major roadblock this week. Mt.Gox, the Tokyo-based exhange that currently handles about three-fourths of all Bitcoin trades in the world, is suing the Seattle-based Bitcoin exchange CoinLab for about $5.3 million. Last February, the two companies announced a partnership--CoinLab would become Mt.Gox's exclusive North American agent. The deal made sense, largely because Mt.Gox couldn't serve the American market efficiently. But by May 2013, things had gone awry. CoinLab claimed Mt. Gox breached the contract. "Defendants have breached the exclusivity provisions of the Agreement by directly servicing customers in the United States and Canada since the Agreement took effect," CoinLab alleged. The exchange announed it was suing Mt.Gox for $75 million.
  • William Kaye: GLD has lost 550 tons of gold in one year. There are a few anomalies here: One is that the paper price of gold peaked in September of 2011, and yet in spite of a sustained price decline through last year, the inventory and the number of shares of GLD continued to sustainably increase. Then there is SLV, which is an identical structure for holding physical silver in an ETF format. As everybody knows, the price of silver has been whacked far worse than gold, and yet they have lost virtually no inventory in SLV.
  • John Ing: Despite trillions injected into the economy, there are 47 million people living on food stamps in America. And to no surprise, it appears the Fed lost courage to taper the monthly $85 billion asset purchases as the likelihood of tapering decreases due to the market’s addiction to cheap money. The trading action, however has caused a shortage of physical bullion. Inventory stockpiles on Comex are at record lows such that paper claims per ounce of registered gold are at a whopping 70 times. There is simply not enough gold to satisfy these claims. As such we continue to believe $2,000 an ounce is only an interim objective and gold’s twelve year bull run is not over.
  • Andrew Hoffman (Miles Franklin): Since the Cyprus bail-in shocked the world in March, it has been widely accepted as a precedent for future bank insolvencies. After all, the Central banks used up both their capital and credibility bailing out banks over the past five years; and thus, needed to come up with a way to continue their “too big to fail” policies aside from money printing. Governments are preparing to “bail-in” citizens in much the same fashion as banks will be doing to depositors. Look at the onerous, nation-killing taxes Francois Hollande instituted since being elected France’s President on a so-called ‘populist’ platform just 18 months ago. Subsequently, France’s economy is weaker than any in the EU right now – yes, Greece is a good comparison.
  • Bill Holter (Miles Franklin): Had the Fed initially told the truth and said, “We will attempt to print our way out of trouble.” Bond yields would have exploded, the dollar would have collapsed, stocks would have collapsed (then exploded in nominal terms) and gold/silver would have added a “zero” to their prices. What I have simply described here is that we would have hyperinflated from the get go…but we didn’t. Why? The simple answer is “derivatives.” Derivatives can push, pull, support, suppress or otherwise “paint” asset prices in whatever manner or “picture” that they’d like by using derivatives with 100 times more force than the “$1″ that they start with. When you add in the fact that the Fed can create unlimited “dollars” and then multiply the dollars by 100, “managing” the overall picture to look however you want becomes a fairly easy task until…The picture itself is so far from the reality that things don’t make any sense at all. Or, until the “reality” begins to prove the farce of the picture. The “reality” such as cars and real estate not selling, municipalities (Detroit) going bankrupt, retirement plans or bank accounts being bailed “in” rather than “out” or the Federal Reserve being forced to purchase ALL debt issued by the Treasury. This is where we are now. We are 5 years into a “painted picture for the greater good” (sounds socialist doesn’t it?). The East will not be satisfied by pieces of paper. They will not accept a piece of paper that may (probably) be one of 100 others or more that “say” gold ownership on it.
  • Michael Noonan (GoldSilverWorlds.com): If the price of silver were allowed to rally and reflect reality, the exponentially higher prices would expose what lies behind the central bank fraud. The market is rigged. The sad truth is all markets are rigged. The Libor interest rate market, the Federal Reserve taper-on stock market, the OPEC oil market, the De Beers diamond market, the US world-wide drug trade market, the pharmaceutical market, the food supply market. Each factor that controls a specific market is also ultimately controlled by the elites, the New World Order.
  • Sri Jegarajah (CNBC): Gold prices may close the year near $1,300 lifted by a "relief rally" if the U.S. Federal Reserve votes this week to keep stimulus measures intact, CNBC's latest survey of bullion market sentiment shows. The precious metal, one of the biggest casualties of Fed 'taper' fears, has lost more than a quarter of its value this year – its first annual decline in 13 years as investors increasingly rotate into equities and away from safe-haven bonds and bullion.
  • Mark O'Byrne: Bearish bets by hedge funds and money managers in U.S. gold futures and options are close to a 7-1/2 year high, according to data from the Commodity Futures Trading Commission (CFTC). SPDR Gold Trust, the world's largest gold ETF, said its holdings fell 8.70 tonnes to 818.90 tonnes on Monday - its biggest outflow since Oct 21. Holdings are at their lowest since January 2009 after more than 450 tonnes of outflows this year caused by traders and more speculative investors channelling money towards riskier assets such as equities and bonds which are at record highs in many countries. Importantly, and little reported on is the fact that the ETF flows have been matched and greatly surpassed by physical gold in China and imports from Hong Kong into China alone. Gold has lost 25% of its value this year after 12 years of gains. There are credible allegations that the market was subject to price manipulation with banks manipulating prices lower through massive concentrated selling at times of low liquidity. Allegations that Chinese entities may be manipulating paper gold prices lower in order to buy physical gold on the cheap are gaining credence.

All this and more on...

The Harvey Report!

https://www.tfmetalsreport.com/comment/610550#comment-610550

DayStar

dgstage
Dec 17, 2013 - 9:37pm
SS121Bron Suchecki
Dec 17, 2013 - 9:24pm

@Bron

Bron: Just to follow up on that, I was discussing how the majority of traders view gold as a paper currency and trade it as such. Describing how things ARE does not mean I agree with that and think that is how things should BE. A point possibly lost on Mr Dingo.

Yes indeed, sorry if i mistakenly mixed you personally into the context of that part of the discussion. And again, thanks for the refinery ops info, good stuff.

I Run Bartertown
Dec 17, 2013 - 8:58pm

“It won’t be long before the people

storm this chamber and hang you, and they'll be right."

Godfrey Bloom: The State is an Institution of Theft @goddersbloom

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