A Conversation with Bron Suchecki of The Perth Mint

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:





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


Bron SucheckiSS121
Dec 17, 2013 - 8:28pm


"The refinery guy, Bron, works around Gold all the time, so discussing Gold as just another currency,... that was kind of surprising."

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.

Bron SucheckiDingo
Dec 17, 2013 - 8:22pm


If you bothered to read my personal blog (try here for a start https://goldchat.blogspot.com.au/2013/05/questions-from-tf-metals-report...) you will find that I do not have a mainstream world view or are unaware of the "thin veneer of respectability that the major banks have". You have jumped to a conclusion based on one interview where I go where the interviewer wants to go.

Bron SucheckiHeirHelmut
Dec 17, 2013 - 8:18pm


It wasn't interrogatory at all, maybe some of the editing made it look a bit choppy. Also the distance/delay and skype can result in talking over each other. BTW I don't mind tough questions, I've had a lot of interrogations by potential clients over the years with really blunt questions.

Dec 17, 2013 - 7:55pm

Completely off-topic rabbit hole

Thanks for the effort in arranging and putting together the interview, Argentus -- well done!

The following has no (direct) link to the current conversation, but I figured at least one or two fellow Turdites might be interested -- a roundup from reddit about the interesting rash of extremely (fantastically) high-denomination, officially deemed to be COUNTERFEIT bearer bonds and other sovereign financial instruments that seem to have surfaced as fakes over the last several years.

From the article:

To begin with, here's a brief overview of three essential methodological assumptions of any counterfeiting scheme:

  1. One does not counterfeit something that does not currently exist as a medium of exchange, or that is not convertible into it. One only counterfeits, or mimics, something real.

  2. Similarly, one does not counterfeit 500, 1,000 or 10,000 dollar bills. One only counterfeits what one can reasonably expect to tender to a target group, and thus must tailor its counterfeit function to the target's scale of affluence, and do so without raising suspicion.

  3. One must produce a product of sufficient quality to pass the scrutiny of the target group. One does not go to the expense and effort of producing a fraudulent product that cannot be used because it does not exist, is too large a denomination to be traded with the target group, or is too poor in quality to be traded. Quality must be sufficiently high to ensure first sight acceptance of its authenticity.

The author relies heavily on Joseph P. Farrell in interpreting/analyzing the events, but the EVENTS THEMSELVES are interesting enough to look at. Ultimately, something north of $8T in (mostly US, bullion-backed, dated 1934 and signed by SecTreas Morgenthau) bonds have been found in the last 4-5 years.

Interesting compilation, DYODD.

  Image cannot be displayed

Dec 17, 2013 - 7:47pm

Thanks Murph

It seems the only thing that has changed between Hedges and Taibbi's articles is that the last grocery store closed. A city of 77000 people without a place to buy food is stunning. With all those drugs going on one would think there would be a demand to cure the munchies.

Dec 17, 2013 - 7:35pm

Latest from Bill Holter

Jim Grant did an interview this morning on CNBC where he argued with Steve Liesman over the success of the Fed’s QE policy. He summed it all up in one sentence, “The Fed can change how things look, not how they are.” This statement IS absolutely correct by definition. I say, “By definition” because if it were not true we would have never made it past mid 2009 without the complete closure of the financial system.

Let me explain this in exactly the same words that I wrote back in late 2008:

The problem is solvency; you cannot solve a solvency problem with more liquidity. More liquidity can only be created by adding more debt which by definition adds to the solvency problem. More liquidity can postpone or mask the bankruptcy but it cannot magically make bad debt into good debt.

Without question the problems that led up to 2008 and persist even worse today is “too much” debt, much of this debt is already “bad” with even more “going bad.”


Dec 17, 2013 - 7:28pm
Dec 17, 2013 - 7:12pm

Hmm.. pretty good

Hearing gold investments, trading, and such, i thought "not my thing", but will listen anyway, and glad i did.

Especially enjoyed the refinery operations info. The steps, the process etc., and how refineries are kind of a dime-a-dozen and that's not where the profit is.

The refinery guy, Bron, works around Gold all the time, so discussing Gold as just another currency,... that was kind of surprising.

Imo, when this is over... everybody will be 100% sure that Silver and Gold are Money, and paper isn't. So it was interesting to hear such very knowledgeable gents discuss gold from their viewpoints. (And again, the refinery ops part)

That we all see things differently at this stage of the game... probably why we are here, helping each other along.

Thanks AM, being a non-trader/investor I surprisingly enjoyed the listen. And 'Good Job' on the interview itself. You're a good interviewer.

Dec 17, 2013 - 5:39pm


thanks for the jim grant stuff .... clearly it was not his first day that the MSNBCbs rodeo and he was going to make his point whether liesman was speaking or not.

yes lauren is missed at RT

Dec 17, 2013 - 4:41pm

Just FYI- big A2A interview Thursday

The legendary G. Edward Griffin, author of "The Creature From Jekyll Island", will be Turd's guest on A2A. Given that its the last Fedlines of the year, Berkanke's last meeting as Fed chair, and the 100th anniversary of the creation of the Fed, timing couldn't be better! And don't forget, all of us can submit questions for Mr. Griffin... What an opportunity!

If you've been on the fence about a vault membership, now would be the time!

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