PMCP - F.A.Q.

What are the major advantages of gold and other metals as an investment?

The reasons are manifold and widely known: universally accepted medium of exchange, one of the few assets everyone trusts, hold purchasing power, are insurance in turbulent mrkets, etc. Whatever the reason may be, prudent investors should consider adding gold, silver and platinum to their portfolios. The Perth Mint Certificate is unique among precious metals products n that it enables an individual to invest in a variety of metals that are normally combersome to store (e.g. silver), or difficult to buy (e.g. platinum). The same stringent storage standards and government-guarantee inherent for gold holdings, also apply to certificates issued for silver and platinum.

What to consider when looking at gold and precious metals as investments?

When purchased at recommended institutions, investment remains private and confidential, seizure-proof, and tax-free.
Easy and legal to buy
Easy to repatriate
Flexible, "liquid", and portable
There is always a market for gold
t is always saleable in any form
A safe and secure investment
An matchless hedge against inflation, economic and social upheavals and crises
Storage is simple, and costs are low or nil
Bullion and coins are recognized world-wide
As a legal tender, they can be traded internationally

What is the difference between allocated and unallocated storage?

Allocated storage is the traditional way of holding precious metals. Clients purchase specific physical coins or bars from the Mint. The Mint removes these from its operating inventory and places them in the Perth Mint Depository vault under the client's account number.

Allocated precious metal is therefore segregated from the Mint's operating inventory and is held under a custody arrangement. Allocated metal does not appear on The Perth Mint's balance sheet. At purchase, clients pay for the precious metal in the bar or coin, the relevant fabrication charges, and one year's storage fees.

With Unallocated storage clients purchase an interest in an undivided pool of precious metal held by The Perth Mint. The Mint purchases an ounce of precious metal from the spot market for every unallocated ounce it sells to clients. Accordingly every unallocated ounce is 100% backed. At purchase, clients only pay for the precious metal. There are no fabrication charges or storage fees, until clients elect to convert their unallocated into a specific coin or bar, which they can do at any time.

How can unallocated be 100% backed, yet there is no storage fee?

Unlike other depositories, which are merely warehouses, The Perth Mint is a manufacturer of precious metal products and through its interest in AGR Matthey, one of the world's largest refiners. Accordingly, the Mint has a substantial requirement for physical metal to support these operations. To support this work-in-progress inventory, the Mint traditionally borrowed metal from bullion banks, at a cost. At the same time, there were investors paying to store metal with bullion banks and others. The Mint realised that if it took deposits directly from investors, it could cut out the intermediary and create a win-win situation: the Mint wins by obtaining funding for its inventory and investors win by getting 100% backed storage at no charge.

Remember that any unallocated (as well as allocated) metal is fully covered by the Government Guarantee. The Western Australian Government imposes strict operational procedures and restraints on The Perth Mint's management. The Perth Mint is not a bullion bank and does not provide project financing or bullion lending/derivative services to mining companies or other entities. It does not lend client's unallocated metal to support short selling transactions or other derivative activities. The unallocated metal is utilised solely to fund the Mint's operations. Part of The Perth Mint's business mission is to provide investors with one of the world's safest locations for precious metal storage, especially in an environment of increasing global financial and corporate risk. The use of unallocated metal outside of The Perth Mint's operations is not consistent with this mission. It would introduce an unacceptable level of risk and compromise The Perth Mint's international reputation as a safe haven depository.

If unallocated is on the balance sheet, doesn't that mean I am exposed if the Mint becomes insolvent?

No. It is important to note that The Perth Mint is wholly owned by the Government of Western Australia (which enjoys the highest credit rating possible by Standard and Poors) and operates under an explicit AAA rated Government Guarantee. This means that it is not possible for the Mint to become insolvent because the affected parties would invoke the Government Guarantee and request the Government make good the debts of the Mint. The Perth Mint is therefore bankruptcy remote. Your exposure is actually to the Government's solvency. Perth Mint Depository clients thus ultimately accept a sovereign risk exposure to the State of Western Australia.

Does usage of the metal by the Mint affect my ability to collect physical metal?

No. Any use by the Mint of unallocated metal does not affect a client's right at any time to sell or request delivery of metal in a physical form. The Mint has a legal obligation to ensure client precious metal is available for collection within a specified period from the date of receiving a client's instructions. The Perth Mint maintains finished goods inventory of its coins and bars at all times to meet normal demand from its distributors and Depository clients. Accordingly, unallocated clients will usually be able to collect their metal within a few days of giving notice.

How private is my investment?

Client confidentiality and privacy is assured in Australia, by the legal provisions of the "Gold Corporation Act 1987". The Perth Mint's records utilize code numbers to ensure client confidentiality and security. Swiss law forbids the disclosure of information of any assets held by an investor to any person or institution, without the owner's consent.

How safe is my investment?

All Perth Mint Depository Services precious metal deposits are insured by Lloyds of London at The Perth Mint's cost. Investors also have the additional security of a Government guarantee in the Gold Corporation Act 1987. Few other depositories in the world can offer an equivalent level of investor protection. Perth Mint Depository Services stores the depository precious metal in high security vaults approved by its international insurers. The confidentiality of client transactions is protected under specific legal provisions enacted in the Gold Corporation Act 1987 . Client precious metal holdings are audited annually by independent auditors appointed by the Auditor General's Department of the Western Australian Government.

What is the usual minimum investment required?

The minimum is $10,000 for the first purchase and $5,000 for subsequent purchases

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