Monday, April 3, 2017

Perth Mint 2017 1oz Silver Swan (Mintage: 25,000)

If you are looking to buy some silver, here is a new coin for your consideration. I received an email this morning from Bullion Money, which read:
We're excited to unveil an exclusive product within Australia, The 1 oz Swan Silver coin minted by Perth Mint Australia. A maximum mintage of only 25,000 coins with a fraction of this quantity available in Australia. The Coin features a new swan design on the obverse with the queens head on the reverse similar to other Perth Mint legal tender coins.  Get yours now before they are all gone!
The very low mintage on this coin caught my eye. Low mintage Perth Mint silver bullion coins often attract a premium over the medium to long term, sometimes even over the short term. A great example was the 2014 1oz Silver Australian Wedge-Tailed Eagle Coin. I wrote about these on release when they were only $7 over spot and recommended them as a coin to buy, they quickly sold out. Spot price of silver fell lower in the months that followed, but the value of these coins rose with demand. Today spot price is around the same as when this coin went on sale, but the coin sells (on ebay) for around $50-70, a premium of around $27-47 over spot.

This new 'Silver Swan' coin has half the mintage of the above mentioned coin. It has an iconic bird which has featured in the Perth Mint logo. APMEX write:
The Swan is an iconic species that is so synonymous with the Perth Mint itself that it even appears in the Mint’s logo. The Perth Mint’s operations are situated in the heart of Perth, the capital and largest city of Western Australia. Founded in 1829 on the shores of the Swan River, the original colony in the territory was in fact called Swan River Colony, the location of which is now Perth.
Bullion Money's product page mentioned this will have a varying design (unlike the Wedge-Tailed Eagle which has seen some years repeating a design):
New from the Perth Mint is this limited mintage Silver bullion coin with a unique Swan design! The Silver Swan coin has a limited mintage of 25,000 coins made of .9999 fine Silver. This coin is the first in what's expected to be an annual series of 1 oz limited mintage Silver Swan bullion coins with designs varying each year, much like the heralded Koala and Kookaburra coin series from Perth.
In summary the Perth Mint 2017 1oz Silver Swan Coins:
  • Have a (VERY) low mintage (for a bullion coin)
  • Sport an aesthetically pleasing design (swan, iconic to Perth Mint)
  • Are housed in individual capsules
  • Have a quality finish
  • Are produced by world renowned Perth Mint 
  • Come with legal tender status
  • And are priced as bullion coins on release
I don't expect these coins to last the week at Bullion Money (if a day or two) and I put my money where my mouth is, having placed a substantial order for the coins. If you are interested, then you can purchase the coin (in Australia) at Bullion Money on this page.

Image Courtesy of Bullion Money on Instagram
Note: Bullion Money is a site sponsor, however adverts are funded through a fixed monthly sponsorship, not pay per click or for writing sponsored content. The above post was written immediately following receipt of their email notification (received by all customers) and having purchased some of the coins for myself, seeing them as a worthwhile investment.

[Edit] At the time of posting this article (and making a purchase) the coins were available for spot +$7 for 100+ coins at Bullion Money. Prices appear to have been revised throughout the day.


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Tuesday, March 7, 2017

ASX Silver Stocks: Moreton Resources (MRV)

Please note the disclaimer at the bottom of this site: The content on this blog is the opinion of the author only and should not be taken as investment advice.

It has probably been 6 years since I've written about silver exploration and mining companies. As I wrote mid last year ('Bull Market in Australian Gold Mining Shares')...
I was a very active speculator in gold and silver explorers and miners over 2009 to 2011. I made a small fortune, then lost a good portion of my profits in the downturn that followed.
Many of the obscene gains I made on the way up were in the speculative silver plays on the ASX (I took profit on CCU at 10-15x what I paid for most of the shares held) of which there are typically very few. Most silver is mined as a byproduct of lead, zinc, copper and gold, making projects that focus on silver somewhat a rarity. In 2010 there were really only 3 'pure' silver plays on the ASX (being Silver Mines [SVL], Cobar Consolidated Resources [CCU] and Alycoyne Resources [AYN]) and their share prices all rose to multiples of that in the 2010 post into early 2011 (before their downfall). Today only one of those companies is still in operation (SVL), the other two (CCU & AYN) went into administration during the bear market in silver, both failing to run a profitable mining operation as the price of silver cratered. Such is the risk of a resource company so heavily exposed to a single (volatile) metal.

Today, SVL has a higher market cap than in 2010 and owns additional silver projects such as Bowdens, which it acquired from Kingsgate Consolidated (KCN), however any long term shareholders have been taken on quite an awful ride, including a 100 to 1 share consolidation in mid 2016.

Recently I decided to take a look at what silver companies were currently listed on the ASX given my expectation that we are seeing the beginnings of a new cyclical bull market in precious metals. I used my Gold Nerds subscription to narrow down to those companies which had an (estimated) 50% or greater interest in silver related projects. Here is the list (note: some of the data may have changed since I sorted this list around 2 months ago, though share price should be current as of March 6th):

Click Table to Enlarge
With such a limited selection of silver related resource companies it is difficult to approach the list with the same thoroughness as discussed in a post from last year, A Common Sense Approach to Picking Gold Miners. Anyone looking to put a serious amount of capital into silver related stocks would probably do well to investigate options on global stock exchanges.

However, as I was only looking to speculate with a small amount of capital I decided to look through those options on the ASX.

I was looking for a company with multibagger potential, the possibility that it could increase multiple fold from it's current share price. Typically this is easiest for those companies with a low market cap, so the bottom half of the list (sorted by market capitlalisation) is where I started. I also wanted a company with a reasonable sized (silver) resource already defined, this narrowed down the selection further knocking the smallest company (Malachite Resources, MAR) off the list. Preferring a company with a primary focus on Australian projects knocked Santana Minerals (SMI) off the consideration list. This left me with Argent Minerals (ARD), White Rock Minerals (WRM) and Moreton Resources (MRV).

The one that caught my eye and resulted in a small purchase (at .004) recently was Moreton Resources (MRV).

Moreton Resources is the smallest market cap of the three at the recent share price of .004 (around $8.5 million). It had around $1.2M in cash at the end of last quarter, which may last them to around the middle of the year.

At present it poses a fairly risky prospect as it is as it is awaiting a decision by the Administrative Appeals Tribunal (AAT), ruling on whether research and development claims made in past years (2012 - 2014) were legitimate. If found not to be, I expect Moreton Resources to be in the hole around $8 million (or a portion of) to the ATO.

As a company with a market cap around the same size as the potential liability, this decision could make or break the company. That is the risk. However, I found it interesting that in the recent rights issue, when attempting to raise $1.2-$1.5M, one of the Directors (Tony Feitelson) put up $685k. He has had an association with the company since 2013 and became a Non-Executive Director in 2016. Feitelson and another Director Valeri Melik-Babakhanov have also recently made on-market purchases (albeit small) at the rights issue price of .004. There is clearly some confidence from management in the veracity of their claims.

I think that at .004 some of the downside to a decision against Moreton Resources would be priced in (if they are able to raise the capital to dig themselves out from under such a large liability). If the AAT decision goes in their favour I think there is a lot of potential upside over the next 12-24 months, including a potential spike in price following the announcement.

It was only last year that Moreton Resources picked up a portfolio of tenements (that include their silver resource) from Alcyone Resources (AYN), referred to as their "Granite Belt Project". The project includes a "Maiden JORC", which was confirmed by the company after a review of the resource model (adjusting for depletion from recent production) late last year.

19 Sep 2016: Twin Hills resource: 13.7 Moz silver @ 51.0 g/t and 21 koz gold @ 0.08 g/t

5 Oct 2016: Mt Gunyan resource: 6.5 Moz silver @ 55.1 g/t and 7 koz gold @ 0.06 g/t

Click Image to Enlarge
Alcyone Resources Limited went into voluntary administration in late 2013, having previously held a market capitalisation of around $150-$160 Million in 2011, although the assets purchased by Moreton Resources do not include the mining lease approvals or plant from the mining operations. The same project was previously owned by Macmin Silver (MMN) who went into administration during 2008, being unable to raise capital during the GFC at a critical time.
Junior silver miner Macmin Silver Ltd has been placed in administration.
The company said its flagship Twin Hills mine in south-east Queensland used more working capital than expected and it could not raise further funds because of the global credit crisis.

Prior to it's troubles I understand that Macmin Silver also had a market cap of more than $100 Million. So this silver project has been a bit of a 'hot potato' so to speak, being passed from one company to the next, being revalued higher by the market as the price of silver rallied and then ultimately leading to the companies demise with a major leg down in the price of silver.

My interest in having a little exposure to such an company and it's project is due to my expectation of a continuing bull market in silver. Should Moreton Resources make it through the short term risks posed by the AAT decision and silver continues to trend higher, there is the potential that this project and the company overseeing it is revalued higher, potentially to the tune of $100 Million (though expect we would see significant dilution to existing shareholders before reaching that sort of market capitalisation). This is also without assigning any value to Moreton Resources other assets such as their coal projects (which are of less interest to me, but could also add substantial future value).

Those interested in the company and project, but who have a low risk tolerance, would do best to wait on the sidelines until a decision is handed down by the AAT (there is currently no fixed time for this decision). However, personally I felt the potential reward outweighed the risks provided position size was kept small. I may buy more if the AAT rules in favour of Moreton Resources in the outstanding matter.


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Monday, December 26, 2016

MacroBusiness Censors Comments At Odds With Narrative

The comments section at MacroBusiness, once a lively space for robust economic discussion, now often acts as little more than an echo chamber.

If the response from readers is strong enough in disagreement with the site authors, then those commenting are belittled and ignored (as I wrote in MacroBusiness Persists with War on Cash in Australia). If there is an alternative view or statistics put forward which don't fit the MacroBusiness narrative, then they are ignored, name calling begins or in some cases the comments are edited or deleted altogether.

The most recent example of the latter was in the comments section of their recently released report 'Can the great “can kick” save Australia?' (paid subscriber only content). Basically the report amalgamates a range of charts and narrative which supports an outlook that several dark clouds on the horizon (end of car manufacturing, slow down in construction and mining, etc) will converge in a short space of time and crater Australia's economy. They have been writing to this script for a number of years now, slowly pushing out the timing as unexpected economic circumstances have impacted their predictions.

The report was released late Christmas Eve and I happened to be up at the time. After reading their report and having seen some statistics on manufacturing employment at Pete Wargent's blog around the same time, I decided to post these numbers under the report:

Click Image to Enlarge

The report posited that there is basically no hope that these converging economic headwinds might be offset by some other factor which hasn't been considered. I was simply suggesting that if the Australian Dollar is smashed to 50c or lower (against the USD), as has been predicted on MacroBusiness, then perhaps a resurgence in Australian manufacturing could be one positive factor to keep an eye on:

Click Image to Enlarge

My comment was met with a ridiculous level of hostility (particularly from David Llewellyn-Smith):

My original comment (first screenshot above) was later deleted along with a number of replies.

It's a real shame that the editors / owners of MacroBusiness feel the need to use personal insults and name calling to push their agenda. It's also ironic that they attack others for 'selective analysis' while censoring current or potential future positive economic developments (that they've ignored in their own analysis) from being posted in the comment section of their site.

Note: A number of my comments have been edited and/or deleted recently on MacroBusiness. To date I have only noticed edits which remove part of the content rather than add to it (this can still distort context). Be skeptical of my comments there if something looks amiss or I don't respond to your replies. You can always reach out via Twitter or email.


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Sunday, December 18, 2016

MacroBusiness Persists with War on Cash in Australia

I'm a regular reader, subscriber and intermittent commenter at MacroBusiness (less frequently since my comments started getting trapped in their spam filter or outright deleted when disagreed with). They often produce well thought out arguments on finance and economic topics, which aren't being covered adequately by the mainstream media.

However, these quality pieces containing mostly original content are interwoven with myopic 'filler' articles which often appear rushed, copy and pasting swathes of text from other sources, adding a few lines of comment and then posted to the site, acting as an aggregator of news. One such example recently had blogger Leith van Onselen writing about the elimination of large denomination bank notes, it ended on this note:
"Personally I believe Australia should phase-out both $50 and $100 notes. We are turning into a cashless society anyway, so phrasing-out these bills wouldn’t create much of a burden to the ordinary law-abiding person."
The article included a quote from UBS analyst Jonathan Mott, "Removing large denomination notes in Australia would be good for the economy and good for the banks" and this corker from Peter Martin, "Phasing out high denomination notes would be painless, for those of us with nothing to hide" (eerily similar to a quote often attributed to Nazi propagandist, Joseph Goebbels).

The post on MacroBusiness generated hundreds of comments from readers who disagreed with the blogger. Many of them putting forward solid arguments against his conclusions, which included the following:
“..legalising all drugs would do much more to stamp out organised crime than removing large bills.”

“I don’t see why a digital record of every transaction I make should be kept and intercepted and stored by an all seeing government. There are some cases where cash makes sense and where you don’t necessarily want certain individuals to know what you’re buying, when and why. Not all of it is illegal.”

“How are banks held accountable in your cashless society? If banks (let’s say all of them), take undue risks, how is a depositor to “opt out”?”

“Let’s make it so no small market can exist. We can’t have farmers growing good food and selling it straight to people who want it. We MUST force everyone into the big supermarkets. Let’s make it so when all these mad elitist bastards want negative nominal IR’s there is no way to avoid their lunatic scheme for the world.”

“Moving to a cashless economy presently means that you must use a bank as an intermediate. The banks are private corporations that are so powerful they can’t be investigated.”

“..removing 50’s and 100’s has no impact on the black economy. It just becomes an inconvenience for everyone else.”

“We can’t trust the banks to give us financial advice, and we need a Royal Commission into them just to try and get them honest (unlikely to happen), but it’s okay to eliminate high-denomination notes and keep that money in banks instead?”

“..If we real see yields on bank deposits head to/below zero and stay there…….why would you keep your money in a bank in that environment”

“The problem with non cash transactions is the simply ridiculous amount of information (data) that’s being collected (and permanently stored) about individuals and what they buy, when and where. Big data is the corporate gold mine that industry is just starting to really use, most governments are still in the clueless category but they’re learning quick AND they are being sold different service packets by big-database owners. So it’s not simply about the government storing purchase information information about you tomorrows big data is a global corporation and provides a 100% clear picture of each and every individuals life, who they associate with and when and where this happens. Transactions are the glue that ties it all together, the purchase that links you personally with all the available data.”

“China only has 100 RMB notes (about $20 AUD). It didn’t stop tax evasion. It didn’t stop money laundering. It didn’t stop drug dealing’. Of course, having high denominations will make it easier, but to say all of this will magically disappear when the $100 is phased out is wrong.”
Eliminating cash eliminates the option of using cash to protect oneself in various difficult circumstances – some legal, some quasi-legal and some no doubt illegal…. but all *ethical*. The most obvious one is trying to survive when your government falsely believes you are a criminal. This happens all too often now and is probably only more likely in future. Removing cash without providing an alternative for people who might face these challenges is a VERY F*CKING BIG DEAL.
Leith's response in the comments included praising India for their recent demonetisation of "large" denomination notes (value of which are in the vicinity of A$10-20), calling those who disagreed with him tin foil hatters, suggesting that removal of the $100 note would "certainly interrupt the black economy" and finally bowing out of the comments without addressing many of the valid arguments raised by his readers.

I had considered writing this post after this first article, but thought I would give Leith the benefit of the doubt, perhaps his brain fart would not be repeated and he would not broach the subject again. I was wrong. In the last week Leith published a follow up article supporting comments from Kelly O’Dwyer (oft referred to as Kelly O'Liar in MacroBusiness headlines when she says something they don't agree with), vilifying the $100 note. Leith failed to address any of the reasoned comments which followed his last article.

The article generated more comments worthy of consideration, which included the below:
"What on earth is wrong with people holding cash if they choose to? As many have noted – criminals will readily find some other way of settling their transactions. Opposition to cash usually boils down to the latest efforts by the private banks and their minion neoliberal cheerleaders wishing to extend the already virtual private monopoly over money creation to a complete monopoly."

"I’m still in Vietnam at present and took cash with me to exchange while here for spending money. Every money exchanger I have come across has $100 notes, I only brought $50 notes as I withdrew them from the ATM. How many other money exchangers and foreign banks have pools of Aussie $100 for exchange purposes across the world? Maybe instead of blaming criminals they should be considering this?"
The second comment in particular makes a lot of sense and explains one reason we may be seeing an increase in demand for high denomination notes, for tourists traveling to our country (in the 12 months to October 2016, the annual number of arrivals increased by 11.1% relative to the corresponding period of the prior year):

A recent RBA Bulletin (The Future of Cash) points to similar reasoning: with major cash industry participants indicates that increases in overseas demand are a fairly usual occurrence when the Australian dollar depreciates. Part of this demand is likely to stem from the increased attractiveness of Australia as a destination for tourism and education, with both of these groups of visitors tending to be large users of cash.
The bulletin highlights that due to the anonymous and untraceable form of cash, it is impossible to calculate how frequently cash is used in facilitating illegal activities:
A potential source of currency demand that has attracted international attention recently is the use of cash, particularly high-denomination banknotes, to avoid reporting income to the authorities, or to finance illicit activities. Cash may be valued by those engaged in such activities because it is anonymous and untraceable. By definition, however, this also means that it is not possible to assess the demand for cash for these purposes accurately.
However, it does highlight that phasing out the $100 note is unlikely to be disruptive to criminal elements:
As noted, it is not possible to estimate the extent to which cash, or any particular banknote denomination, is used in illegal activities. However, liaison with AUSTRAC (Australian Transaction Reports and Analysis Centre) and the Australian Crime Commission suggests that it is the $50 denomination – rather than the $100 – that tends to be preferred by criminal elements because of its ubiquitous use in legitimate transactions. This suggests that to the extent that the $100 banknote is being used for nefarious purposes, any phase-out may not be particularly disruptive to those engaged in such activities.
This directly contradicts Leith's claim that getting rid of $100 notes would "certainly interrupt the black economy".

And if you thought about it rationally, a lot of the transactions occurring to avoid tax (e.g. tradies performing 'cashies') or buy illegal goods would continue unimpeded using smaller notes as the transaction would typically be only a small handful of notes regardless of whether using $50s or $100s.

The RBA highlights there are many legitimate uses for cash:
Demand for cash in the economy stems from its roles as a means of payment and a store of value.

As a means of payment, cash has a number of attributes that may be valued by end users.

It has near-universal acceptance, facilitates simultaneous exchange and instantaneous settlement, is convenient for person-to-person payments and can still be used at times when electronic payment methods are unavailable due to internet or electricity outages.

Cash transactions are also anonymous and, with low rates of counterfeiting in Australia, fraud may be less of a concern than when using alternative payments.

Cash can also be used as a store of value and, for this purpose, its attributes come to the fore in times of economic/financial uncertainty. In particular, in circumstances in which the viability of banks is under question – as was the case in many countries during the 2008–09 financial crisis – cash may be considered a superior store of value to money held in the form of bank deposits. That is, claims on the central bank are preferred to claims on a commercial bank.
And let's face it, a move to reduce large denominations is really a nudge toward a cashless society, which would have it's own problems as recently highlighted by the BIS:
There are academics and politicians advocating the abolition of cash. What do you think of that?

Negative nominal interest rates, especially if persistent, are already problematic. Quite apart from the problems they generate for the financial system, they can be perceived as a desperate measure, paradoxically undermining confidence. Getting rid of cash would take all this one big step further, as it would signal that there is no limit to how far into negative territory nominal interest rates could be pushed. That would risk undermining the very essence of our monetary economy. It would be playing with fire. Also, it would be quite a challenge for communication, even in simply economic terms. It would be like saying: "We want to abolish cash in order to tax you with lower negative rates in order to - tax you even more in the future."
All things considered phasing out $100 (or large denomination) notes would be a pretty awful policy direction for Australia to take. It would:
  • Make it more difficult to keep spending private (from government / corporations / banks)
  • Limit options when trying to protect oneself from risky banks (ironically something MacroBusiness highlights often)
  • Inconvenience those needing to use cash regularly in transactions, a majority of which would be conducted legally.
And all despite lack of evidence or reasoned argument that doing so would reduce the so called "black economy".

The team at MacroBusiness need to think this one through a little better.


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Sunday, November 6, 2016

Perth Mint Dragon and Phoenix 2017 1oz Silver Coin

I have another coin recommendation for readers' consideration. That is the: 

Perth Mint Dragon and Phoenix 2017 1oz Silver Bullion Coin


I posted a thread about this coin a number of days ago on Silver Stackers to get some market feedback as I thought the coin had a lot of potential. With a mintage of only 50,000 and only 5,000 of those being sold directly from Australia, it reminded me a great deal of the 2014 Wedge-Tailed Silver Eagle Coin I had recommended on this site a couple of years ago (which has increased in value substantially despite spot price having moved little since).

Interest was strong with a number of members expressing they would like to purchase 100 or more coins, so I don't expect the 5,000 being sold through Australian distributors of the coin to last long.

The Perth Mint gave an indication on their blog that it is a 'one off' however I was contacted by the company who commissioned the coin (LPM) and they advised to expect different coin 'types' with the same design, such as a high relief and/or gold version. The coin was conceptualised and designed over two years before release. Design approvals for a 2018 coin are in the pipeline, meaning this is intended as the first coin in a series (which in my view adds to it's collectability), described by the LPM contact as being 'Chinese based with international appeal'.

Dragon and phoenix have been represented together on a number of coins in the past. When I asked in the Silver Stackers thread about the significance / symbolism I received the following response from one member:
In China, dragon and phoenix are also symbols for marriage harmony.

Traditionally, the groom wears a red suit with dragon pattern on it, and the bride wears a red dress with phoenix pattern.

Dragon is also the symbol of the Emperor and phoenix is the symbol of his wife being the Queen.
Perth Mint said the following on their blog:
The dragon has supreme status in Chinese mythology as the greatest divine force on Earth. The Phoenix is regarded as an immortal bird whose rare appearance foreshadows harmony at the ascent to the throne of a new emperor.

In Feng Shui, the dragon and phoenix are perfect matches for one another. The phoenix is ‘yin’ while the dragon is ‘yang’ in the Chinese philosophical account of natural balance and interdependence. Their portrayal together is a widely recognized symbol of everlasting love.
The coin designer was Tom Vaughan who also designed the 2014 Year of the Horse Gold and Silver Coins for Perth Mint and the 2017 Year of the Rooster Silver Coin (along with many others). In my opinion the coin design looks great, though I wonder whether it would have looked better with the creatures head to tail, instead of head to head and also perhaps smaller on the coin, so the design looks less 'busy'. Also I'm not a fan of the 'cartoon like' eyes on the dragon. Nit picking aside, I am sold and think it is worth buying if you can purchase for less than $10-11 over spot (and have bought some myself).

The phoenix and dragon have been represented on a number of Chinese coins and medals in the past including this coin from 1990:

And this recent beauty from the Nanjing Mint (photo via Chinese Medals):

This medal is very nice with a fantastic design and high relief finish, however is minted in very low numbers and is much more expensive and difficult to source, so I see it belonging to a different market to the Perth Mint coin.

The Perth Mint Dragon and Phoenix 2017 1oz Silver Coins can be purchased (at present) from:


I understand that Modern Coin Mart is the exclusive distributor in the North American Market, so you can probably expect to see these appearing soon in slabbed / graded form.

Those who follow my bullion coin recommendations will see they are often a hot product which sell out quickly, so best to move fast and avoid disappointment if you have an interest in purchasing for release prices. For those who missed out on the Monkey King Coin which I recommended previously (they have since sold out at Perth Bullion and APMEX), these can still be purchased at LPM for a great price (currently 'on sale').


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