Tuesday, February 1, 2011

Perth Mint Struggling to Keep Up with Demand?

For those not familiar with the Perth Mint they are Australia's premier supplier of precious metal coins, bars and investment services. They are also well regarded for the services they provide to customers world wide, such as coin blank minting and depository services.

It is surprising to hear the increasing number of stories from customers who are struggling to purchase physical products through the mint.

A couple of examples I came across today include a report on Silver Stackers forums from user silversurfer2010 that there were no 100oz or 1kg Silver bars for sale when ordering by phone and he was not given the opportunity to place an order at today's price, he had to make his purchase through another dealer who had stock.

I also noted some comments from user Jetson5 on the Hot Copper forums that they were out or low of many products on their relatively new online bullion store. He reported the following inventory when checking earlier today:

0 x 1 Kg Kookaburra Coin
0 x 1 Kg Koala Coin
0 x 20 oz Bars
0 x 10 oz Bars
9 x 100 oz Bars (was @ 13 in stock 1 hour before he reported 9)
28 x 1 Kg Lunar Coin
Multiple 1 oz coins available, but for how much longer??

It was also mentioned that the site does not appear to allow back orders to lock in a price and wait for stock availability.

As I already mentioned in a previous post (on whether we are entering the 3rd phase of the bull market) the Perth Mint has already suspended sales of 5 and 10 ounce coins to concentrate on more popular sizes as they were struggling with production of the larger range (reaching manufacturing capacity).

Bron Suchecki who works for the Perth Mint recently mentioned that they are working on increasing bar capacity (allowing higher output) and that unavailability of select retail products can sometimes be caused by  an unexpected increase in demand for a specific product type (e.g. they may run out of 10oz bars, but still have plenty of 1kg stock), however the above discussed shortages indicate that this current situation is somewhat more than just 1 or 2 products out of stock.

Are Perth Mint struggling to obtain Silver (is the lack of product due to a shortage?) or are we simply looking at a bottleneck in their retail sized output?

Please share your recent experiences with purchasing bullion from the Perth Mint in the comment section below. It would be interesting to know how many others are struggling to get Silver from the Perth Mint!


BB.

Disclosure: Positions held in Silver. Not investment advice. Do your own research.

14 comments:

  1. Why not ask him yourself?

    His blog is http://www.goldchat.blogspot.com/

    It has a comments section like yours. You can leave a question.

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  2. Purchased a 1kg bar a month a go from the Perth Mint and the lady said 'ooh yes we have plenty of silver'. A month prior to that bought some 10 & 20oz bars and no problem.

    I will add though that the line to the teller was the longest I had ever seen....30 minute wait. But that was yesterday and not today, figuratively speaking, and times are different now.

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  3. Justin, I am familiar with Bron's blog and enjoy his posts. However, I feel that his employment with the Perth Mint could lead to less than full disclosure. Can you imagine the panic and scramble for physical that would occur if a representative of the Perth Mint advised they were struggling to source Silver?

    Thanks for your experience Anon, it certainly seems to be a mixed bag of experiences coming from those that have visited the mint, but on all accounts it sounds like they are extremely busy trying to keep up with demand.

    Cheers

    BB.

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  4. Not necessarily new. I popped into the Perth Mint on a trip out to West Australia when I was still living in Oz. Had $6,000+ AU cash in my money belt and was hoping to buy 200 1-oz koalas. (This was back when the price of silver was lower, but so was the value of the Aussie.) Those buggers couldn't even sell me 200 coins right at the mint! I had to settle for 170, which was all they had in stock. I loved Australia, but Aussie business practices are kinda slack. It's the "she'll be right, mate" attitude...

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  5. g'day BB,
    just stumbled across your blog. Will be back again. Look like you know your stuff.
    I had a question for you regarding silver bars at Perth Mint. If you had a choice of buying 1kg or 100 oz bars, which would you choose? My aim is to have them as a long-term investment.

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  6. Just refreshed the Perth Mint page and now 100 oz bars are not available. They were available a few minutes ago.

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  7. Hey Turdle GG

    Glad to hear you’ll be back, there is a ‘followers’ link on the sidebar if you keep track of your blogs that way.

    I think the size of the bars you buy should depend on how you will be disposing of them when it comes time to sell. For example if we see a spike to higher prices then the general public may struggle to afford the 100 ounce bars, keeping to smaller bars opens up the number of buyers you will be able to sell to (in my opinion). For example if Silver went to $75 and you decided to sell there would be many more people with $2400 to spend on a bar rather than $7500. If you intend on selling back to a dealer then you would perhaps be better off going with the 100 ounce bars which will have a smaller premium. A mix is not a bad option as well depending on how much you have to spend.
    Thanks for the inventory update also.

    Cheers

    BB.

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  8. Hey BB,

    Given that AUD/USD * XAG/AUD = XAG/USD, and assuming that you measure your wealth in AUD, then you lose money if AUD rises against USD (assuming XAG/USD stays constant). Or, you gain if AUD falls against USD (again assuming XAG/USD stays constant).

    Given this, and assuming you own silver, do you hedge your AUD/USD exposure?

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  9. Hey Turdle GG

    No, personally I do not hedge the exchange rate risk/fluctuations. Silver/Gold have been rising in all currencies over the longer term and I think that's set to continue even if it happens to rise stronger in USD.

    Further to this I find the mining companies I hold even though ASX listed tend to follow the sentiment of the US miners, so even when the metals are falling in local pricing, if they are up in USD then the miners often get dragged higher. I find this provides reasonable balance.

    That's my situation, not a recommendation that this arrangement is suitable for everyone!

    Cheers

    BB.

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  10. BB,

    I suppose you can consider me conflicted so will discount when I say that we don't have any problem sourcing raw silver (ie from mines and/or 1000oz bars). Gold is much hotter than silver right now from wholesale point of view (esp gold kg bars into Asia) so production constraints are the source of our issues.

    The only way to confirm if this is BS is for clients to take delivery of 1000oz silver bars. It is the inability to source those that indicate a real problem. We are not seeing that as an issue in the wholesale markets.

    I would note that 1000oz bars are not sold online as the varying weights don't fit in well into a standardised systems. But Depository clients can take delivery of or buy Allocated in 1000oz bar form.

    Regards,

    Bron

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  11. Hi Bron

    Thanks for the response.

    You've always come across as open/honest and I have no problems taking you at your word. When I said that your reply to questions regarding supply might 'lead to less than full disclosure' I meant that in the case of questions regarding supply your response might change to a "no comment" or wording the response so as to not answer the question directly, I certainly was not implying that you would lie or feed us BS. Your reply above is very clear.

    I have a few more questions, I might pose these over on the Perth Mint blog shortly so that yourself or another Perth Mint rep may be able to answer them.

    Cheers

    BB.

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  12. You've no doubt seen the Q&A in the comments to my Bix Weir blog on the Mint's corporate blog, that explains to some extent the complexities of production.

    Specific questions about Perth Mint best asked on the corporate blog that way if I'm asked to reply it is considered work rather than bludging reading/writing on your site :)

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  13. Thanks Bron, had read the initial post, but not the ongoing comments. Very interesting!

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