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


Dec 17, 2013 - 8:43am


I guess CNBC didn't like it. Video not available.

Dec 17, 2013 - 8:35am

@Argentus Maximus

Thanks for this very interesting interview.

But three things I didn't like about the video:

1. Only Mr. Suchecky is shown.

2. The interview is led in a harsh tone, more like an interrogation. Bron is often interrupted, while he does not interrupt the interviewer.

3. Mr. Suchecky is showing respect to the interviewer and the listeners, by answering from an undisturbed, silent location. Contrary to him, the interviewer didn't even find it worth to go to a silent, undisturbed location. I find this highly disrespectful.

Mr. Fix
Dec 17, 2013 - 8:17am

83 reasons "this won't end well", & why I stack:

#1 Most people that hear this statistic do not believe that it is actually true, but right now an all-time record 102 million working age Americans do not have a job. That number has risen by about 27 million since the year 2000.

#2 Because of the lack of jobs, poverty is spreading like wildfire in the United States. According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.

#3 As society breaks down, the government feels a greater need than ever before to watch, monitor and track the population. For example, every single day the NSA intercepts and permanently stores close to 2 billion emails and phone calls in addition to a whole host of other data.

#4 The Bank for International Settlements says that total public and private debt levels around the globe are now 30 percent higher than they were back during the financial crisis of 2008.

#5 According to a recent World Bank report, private domestic debt in China has grown from 9 trillion dollars in 2008 to 23 trillion dollars today.

#6 In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left.

#7 The six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.

#8 The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.

#9 JPMorgan Chase is roughly the size of the entire British economy.

#10 The five largest banks now account for 42 percent of all loans in the United States.

#11 Right now, four of the “too big to fail” banks each have total exposure to derivatives that is well in excess of 40 trillion dollars.

#12 The total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.

#13 According to the Bank for International Settlements, the global financial system has a total of 441 trillion dollars worth of exposure to interest rate derivatives.

#14 Through the end of November, approximately 365,000 Americans had signed up for Obamacare but approximately 4 million Americans had already lost their current health insurance policies because of Obamacare.

#15 It is being projected that up to 100 million more Americans could have their health insurance policies canceled by the time Obamacare is fully rolled out.

#16 At this point, 82.4 million Americans live in a home where at least one person is enrolled in the Medicaid program.

#17 It is has been estimated that Obamacare will add 21 million more Americans to the Medicaid rolls.

#18 It is being projected that health insurance premiums for healthy 30-year-old men will rise by an average of 260 percent under Obamacare.

#19 One couple down in Texas received a letter from their health insurance company that informed them that they were being hit with a 539 percent rate increase because of Obamacare.

#20 Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 54.9 percent of all Americans are covered by employment-based health insurance.

#21 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.

#22 Incredibly, 74 percent of all the wealth in the United States is owned by the wealthiest 10 percent of all Americans.

#23 According to Consumer Reports, the number of children in the United States taking antipsychotic drugs has nearly tripled over the past 15 years.

#24 The marriage rate in the United States has fallen to an all-time low. Right now it is sitting at a yearly rate of just 6.8 marriages per 1000 people.

#25 According to a shocking new study, the average American that turned 65 this year will receive $327,500 more in federal benefits than they paid in taxes over the course of their lifetimes.

#26 In just one week in December, a combined total of more than 2000 new cold temperature and snowfall records were set in the United States.

#27 According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row.

#28 The rate of homeownership in the United States has fallen for eight years in a row.

#29 Only 47 percent of all adults in America have a full-time job at this point.

#30 The unemployment rate in the eurozone recently hit a new all-time high of 12.2 percent.

#31 If you assume that the labor force participation rate in the U.S. is at the long-term average, the unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.

#32 In November 2000, 64.3 percent of all working age Americans had a job. When Barack Obama first entered the White House, 60.6 percent of all working age Americans had a job. Today, only 58.6 percent of all working age Americans have a job.

#33 There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile, our population has grown by more than 16 million people during that time frame.

#34 Only 19 percent of all Americans believe that the job market is better than it was a year ago.

#35 Just 14 percent of all Americans believe that the stock market will rise next year.

#36 According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has never earned a profit.

#37 Twitter is a seven-year-old company that has never made a profit. It actually lost 64.6 million dollars last quarter. But according to the financial markets it is currently worth about 22 billion dollars.

#38 Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of earnings, and it is currently supposedly worth about 115 billion dollars.

#39 Total consumer credit has risen by a whopping 22 percent over the past three years.

#40 Student loans are up by an astounding 61 percent over the past three years.

#41 At this moment, there are 6 million Americans in the 16 to 24-year-old age group that are neither in school or working.

#42 The “inactivity rate” for men in their prime working years (25 to 54) has just hit a brand new all-time record high.

#43 It is hard to believe, but in America today one out of every ten jobs is now filled by a temp agency.

#44 Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have accounted for only 22 percent of the jobs created since then.

#45 According to the Social Security Administration, 40 percent of all U.S. workers make less than $20,000 a year.

#46 Approximately one out of every four part-time workers in America is living below the poverty line.

#47 After accounting for inflation, 40 percent of all U.S. workers are making less than what a full-time minimum wage worker made back in 1968.

#48 When Barack Obama took office, the average duration of unemployment in this country was 19.8 weeks. Today, it is 37.2 weeks.

#49 Investors pulled an astounding 72 billion dollars out of bond mutual funds in 2013. It was the worst year for bond funds ever.

#50 Small business is rapidly dying in America. At this point, only about 7 percent of all non-farm workers in the United States are self-employed. That is an all-time record low.

#51 The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.

#52 Once January 1st hits, it will officially be illegal to manufacture or import traditional incandescent light bulbs in the United States. It is being projected that millions of Americans will attempt to stock up on the old light bulbs before they are totally gone from store shelves.

#53 The Japanese government has estimated that approximately 300 tons of highly radioactive water is being released into the Pacific Ocean from the destroyed Fukushima nuclear facility every single day.

#54 Back in 1967, the U.S. military had more than 31,000 strategic nuclear warheads. That number is already being cut down to 1,550, and now Barack Obama wants to reduce it to only about 1,000.

#55 As you read this, 60 percent of all children in Detroit are living in poverty and there are approximately 78,000 abandoned homes in the city.

#56 Wal-Mart recently opened up two new stores in Washington D.C., and more than 23,000 people applied for just 600 positions. That means that only about 2.6 percent of the applicants were ultimately hired. In comparison, Harvard offers admission to 6.1 percent of their applicants.

#57 At this point, almost half of all public school students in America come from low income homes.

#58 Tragically, there are 1.2 million students that attend public schools in the United States that are homeless. That number has risen by 72 percent since the start of the last recession.

#59 According to a Gallup poll that was recently released, 20.0 percent of all Americans did not have enough money to buy food that they or their families needed at some point over the past year. That is just under the all-time record of 20.4 percent that was set back in November 2008.

#60 The number of Americans on food stamps has grown from 17 million in the year 2000 to more than 47 million today.

#61 Right now, one out of every five households in the United States is on food stamps.

#62 The U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas.

#63 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.

#64 According to one survey, approximately 75 percent of all American women do not have any interest in dating unemployed men.

#65 China exports 4 billion pounds of food to the United States every year.

#66 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.

#67 The number of Americans on Social Security Disability now exceedsthe entire population of Greece, and the number of Americans on food stamps now exceeds the entire population of Spain.

#68 It is being projected that the number of Americans on Social Security will rise from 57 million today to more than 100 million in 25 years.

#69 Back in 1970, the total amount of debt in the United States (government debt + business debt + consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars.

#70 Back on September 30th, 2012 our national debt was sitting at a total of 16.1 trillion dollars. Today, it is up to 17.2 trillion dollars.

#71 The U.S. government “rolled over” more than 7.5 trillion dollarsof existing debt in fiscal 2013.

#72 If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the equator 45 times.

#73 When Barack Obama was first elected, the U.S. debt to GDP ratio was under 70 percent. Today, it is up to 101 percent.

#74 The U.S. national debt is on pace to more than double during the eight years of the Obama administration. In other words, under Barack Obama the U.S. government will accumulate more debt than it did under all of the other presidents in U.S. history combined.

#75 The federal government is borrowing (stealing) roughly 100 million dollars from our children and our grandchildren every single hour of every single day.

#76 At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

#77 Japan now has a debt to GDP ratio of more than 211 percent.

#78 As of December 5th, 83 volcanic eruptions had been recorded around the planet so far this year. That is a new all-time record high.

#79 53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their homes.

#80 Violent crime in the United States was up 15 percent last year.

#81 According to a very surprising survey that was recently conducted,68 percent of all Americans believe that the country is currently on the wrong track.

#82 Back in 1972, 46 percent of all Americans believed that “most people can be trusted”. Today, only 32 percent of all Americans believe that “most people can be trusted”.

#83 According to a recent Pew Research survey, only 19 percent of all Americans trust the government. Back in 1958, 73 percent of all Americans trusted the government.

So do you have any numbers from 2013 that you would add to this list? If so, please feel free to share them by posting a comment below…

Thank you Info Wars.

Dec 17, 2013 - 8:11am

About that report: " former

About that report: " former director of US Mint who said bars look like ditry gold"


and here:

CoinWeek: Is There Really Gold Bullion in Fort Knox Federal Reserve?



The revenge of the looted coins
In 1933 F.D. Roosevelt did not stop at the mere confiscation of the constitutionally mandated
gold coins of the realm. He sent them to the refinery in order to melt them down. He wanted
to expunge the evidence from history that this great republic once had the largest pool of
circulating gold coins anywhere, ever. Roosevelt betrayed his oath that he would uphold the
U.S. Constitution and went ahead to rob the citizenry by calling in the gold replacing it with
Federal Reserve notes, the value of which he promptly cried down by 56 percent, under the
disguise of monetary reform. The melted gold was given the shape of gold bars and was
stored in Fort Knox, West Point, and other depositories.
Careful as though Roosevelt was to cover his trail in getting away with the loot, he has
made one major blunder. He failed to make the looted gold fungible. The coins were not made
of pure gold: they were an alloy 22 carat in fineness. The reason was to make them stand up
to wear and tear better in circulation. All countries striking coins for general circulation
employed an alloy. Roosevelt thought that he could save the cost of refining the melted gold
to the international standard of 995 fine (24 carat) so the gold bars in Fort Knox are only 22
carat fine. In consequence these gold bars are not fungible. They are easily identifiable as
contraband, the proceeds of the Great Gold Heist of 1933. The shear quantity of this looted
gold makes it impossible to refine it at this late hour. The U.S. gold stinks, and will keep on
The memory of the Crime of 1933 comes back to haunt the government that
committed it. For 75 years nobody suspected that one day these gold bars may be needed to
pacify the market. Everybody thought that they could rest in peace in the depositories till
doomsday. But then, as the proverb says, ill-gotten goods seldom prosper. The Great
Financial Crisis of 2007 struck and the dollar got into hot water. The U.S. Treasury ran out of
fungible gold and had to dip into its hoard of looted gold. It is too late now; the bad odor
cannot be expurgated from the U.S. gold hoard. Should this gold ever show up at an audit, or
as bribe money, it will immediately be recognized. Everybody will see that it originated from
the Great Gold Heist of Roosevelt and that the shame of the U.S. government is attached to it.
Worst of all, it will also reveal that the U.S. has fallen upon hard times. The looted gold was
released in desperation, in trying to stem the tide of burgeoning gold backwardation.
The result is that every time 22 carat gold pops up anywhere in the world, for example,
as an offer to pacify angry possessors of expired gold futures contracts, it will be new
evidence of the fact that Uncle Sam is cornered and tries to bribe his way out of the corner
with looted gold. If Uncle Sam is trying to pay the blackmail on behalf of his cohorts the
bullion banks, in offering 22 carat gold in settlement of contracts calling for 24 carat fineness,
then the world will immediately know what’s up, even if the substandard gold is offered
through intermediaries. Everybody will know that Uncle Sam is trying to cover up, or fend
off, backwardation to prevent the gold basis from going permanently negative. The telltale
sign will haunt him and make the gold crisis worse, not better. Most of the possessors of
expired gold futures contracts will refuse to take substandard gold for settlement, but neither
will they keep Uncle Sam’s secret. Apparently there are already two known instances where
the looted gold turned up. Central banks, in coming to the rescue of their agent bullion banks that were caught red-handed in being naked short in gold, offered 22-carat gold to bail out
their agents. This fact in itself makes the quantity of gold available for resolving the gold
crisis smaller. Permanent backwardation in gold, the Nemesis of irredeemable currency,
cannot be postponed much longer. <<<<

Like much of Fekete's work, it makes an interesting read.

So ... 7 years for Germany to get their gold back. Is that the amount of time required to refine and purify (launder?) those low purity coin melt bars at Fort Knox into 9995 or 9999 purity suitable for return to Germany? I'm inclined to speculate it is.

Dec 17, 2013 - 8:11am

This will put a smile on your face this morning, Turd

Turd, a little strawberries and cream to go with your Wheaties.

CNBC with Jim Grant, I'll let you guess who else.

The best part is at 0:55.

Jim Grant: "Steve, I got up this early to talk, not to listen to you talk. I could do that at home...."


Who's right about QE? Pros disagree

TUE 17 DEC 13 07:11 AM ET

Another quote to remember by Jim Grant:

"The Fed can change how things look, not how things are"


Dec 17, 2013 - 7:50am

No spanking

It was AM's idea. Perfectly fine with me.

Dec 17, 2013 - 6:48am


ill take it!

Great subject Argentus i can't wait to see the video

edit: now back to finishing JY's 60min/NSA write-up.

Dec 17, 2013 - 6:28am

Well I thought it was good to

Well it's no harm to remind folks that for some huge players, gold is a financial, and for yet more it's a currency. Mind you if and when those players can't deliver the actual physical shiny they sold short, the BBs and commodity physical long side (including little me) will hand them their heads on a platter.

It's a financial (bond), and a physical commodity and a currency. As well as the "old gold trade" we're now trading beside FX dealers, bond dealers too, and I think that's where the added volatility is coming from. (Did I forget to mention Central banks there?) Swings in both directions may be bigger for a long time. Some things the price of gold does just don't make sense until you accept that's the case.

Of course that extra volatility from every segment of the investment industry wanting their slice will be wonderful to behold when the bottom is perceived by all those deep pockets as "in". For example an interesting thought is what about when bond portfolio correlation algos decide to allocate a small percentage to gold? The 1970s bull could begin to look like a gnat on an elephant after that point.

I should also like to thank Bron for joining me and giving more time than we originally agreed.

Dec 17, 2013 - 5:51am

Uh OH Papa Turd is going to spank Argentus

Good interview, although I was hoping Bron would give us an "Aussie Aussie Aussie, Oi Oi Oi...)

Dec 17, 2013 - 5:39am

I can hear the sound of some

I can hear the sound of some brains exploding. Nicely written and videod AM.

Warning - Tenacious D. The Montage (Rare Song!)

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