Friday, February 4, 2011

Reply to Bullion Baron on Perth Mint Blog

I recently asked some questions over on the Perth Mint blog regarding shortages of some products that customers have been reporting. Ron Currie, Sales and Marketing Director for the Perth Mint was kind enough to post a detailed reply in a new blog and thought I would share it here for those that don't regular the Perth Mint blog, but have seen some of the recent posts I have made about their (specific product) shortages.

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Bullion Baron has posted comments/questions to the recent Perth Mint blog article entitled Dog Stars At Auction. I’ve noticed that the silver issues he raises have been topical on a number of other blogs and forums in the past few days. In the interest of openness, I’d like to respond to his questions in a separate post so that as many people as possible have the opportunity to read about our position.
  
BB Question: Why does the Perth Mint not allow back orders to be placed at current pricing allowing the customer to lock in a price and product (that is if customer reports are accurate)?


RC Response: There are two reasons. Firstly, to fix the silver price, buyers would have to pay immediately for goods they may not receive for some time. We know this causes angst for clients. Also, our website does not have the capability to take back orders.


Secondly, it is a nightmare to administer and only highlights the inability to supply. We’d much prefer that we only sell when we have product available. Our approach also allows clients to look at other sourcing options because they’re not locked into a contract with us.


BB Question: It seems that Perth Mint has been struggling with coin and bar output for some months now (an earlier example being the suspension of 5/10 ounce coin sales), when do you expect to catch-up to the demand that is currently being seen? Bron has mentioned that measures were being taken to increase production levels, when will the outcome from these measures be seen if demand continues as strongly as we've seen recently?


RC Response: There is enormous demand for silver, particularly in Europe, and we are currently running at capacity. I’m just back from World Money Fair in Berlin and all the indications are that this demand will continue.

Let me emphasise again – there are constraints on our ability to produce. We have plenty of silver – we just don’t have the production capacity to meet demand at present.

We ordered a new press 12 months ago specifically for large silver coins (kilo, 10oz, 5oz) which indicates that we foresaw the need for extra capacity a long time ago. This press recently arrived in Perth from Germany. We hope to have it up, running and producing in the next three months. We’ve also ordered a new press for smaller coins which will arrive later in the year. To house these new presses, we’ve had to build an extension to the factory.

Unfortunately, we can’t install and commission complex new machinery overnight. These activities take time and represent a substantial investment that will increase our capacity to meet future demand.

BB Question: In the case that Perth Mint had trouble sourcing 1000 oz bars via wholesale distribution channels, could we expect public disclosure of this on the blog or in general when questioned?

RC Response: We have no problems sourcing 1,000oz bars and have plenty in stock. Our problem is finding capacity to cast the metal into retail sizes such is the level of demand. There would be no call for public disclosure as we do not foresee any such difficulty arising.

Thanks for all your recent comments and questions Bullion Baron which we are always delighted to receive and respond to.

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BB. 

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