To our valued clients,
If you haven’t seen it already, an article was published today with the following headline:
Perth Mint Sold Billions in Diluted Gold to China, Tried To Cover It Up; Report
And right below the headline, they show a picture of a counterfeit gold bar produced by Credit Suisse. One might call that slightly misleading. We will explain further.
Obviously, it is important to not only read headlines and look at pictures, as the wrong conclusion may be drawn, or the false accusations which are made tend to become all that people remember about the subject. Delving further into the article is important.
The inflammatory headline states that the Perth Mint sold billions of dollars of diluted gold to China. In the text of the article, it’s stated that the purity of the gold itself was not in question and that only some of the 1-kilogram bars might not have met the standards for the non-gold component required by the Shanghai Gold Exchange – 0.01% of silver content – even though it falls within industry standards.
This is a very different statement than what was insinuated in the headline. Not to be overlooked are the political ramifications of the “so-called scandal”, since the opposition leader of the West Australian premier was overseeing refining at the time. One must also wonder if China might somehow benefit from accusing another country of producing diluted product when they are the largest producer of the same product with a different animal printed on it. It is worth noting that the majority of all counterfeit gold and silver coins found originate from China.
We, of course, take any information relating to the maker of the products that we sell very seriously.
We made a call to our wholesale supplier of Perth Mint products (mainly 1 oz gold bars, 1 oz gold kangaroos and 1 oz silver kangaroos, among other products) and asked for any additional information they might have about this article’s contents. They also expressed that they have no concerns over the purity of the product that they have been provided by the Perth Mint and shared with us the following media release from the Perth Mint.
MEDIA RESPONSE REGARDING GOLD DOPING RAISED IN ABC FOUR CORNERS PROGRAM Monday 6th March 2023
Last night’s Four Corners program on the ABC alleged that The Perth Mint could face a potential recall of $9 billion worth of ‘doped’ one-kilogram gold bars from customers in China.
There is no question about the gold value and purity of the gold bars The Perth Mint has sold to customers in China. At all times the gold bars The Perth Mint produced and sold contained at least 99.99% gold, as per their specifications. This has never been in dispute.
The Perth Mint’s one-kilogram gold bars contain at least 99.99% pure gold and up to 0.01% of non-gold materials, including silver and copper. These purity specifications are aligned with industry standards and akin with those set by the international market authority, the London Bullion Market Association.
In September 2021, The Perth Mint was made aware that some of its one-kilogram bars may not have met the non-gold specifications of the Shanghai Gold Exchange (SGE). The SGE specifications demand that the non-gold component – that is, 0.01% of the bar or 100 parts per million (ppm) – contains no more than 50 ppm silver.
The Perth Mint immediately launched a review of its refining practices, including how it applied the industry wide accepted process of ‘doping’ or ‘alloying’ its one-kilogram bars.
Due to the nature of the refining process, there are varying amounts of extra gold above 99.99% in each bar. This is known in the industry as the gold give-away because the customer does not pay for this extra gold. It is gold refining industry practice to minimize the gold give-away without affecting the purity minimum of 99.99%. Minimizing is done through ‘doping’ or ‘alloying’ by ensuring sufficient volumes of non-gold elements. This practice does not impact the 99.99% purity of the gold that the customer pays for.
As part of The Perth Mint’s review of refining practices, we implemented new processes to ensure that one-kilograms bars would have on average minimum gold purity content of 99.996%, compared with the industry standard of approximately 99.992%. As a result of this new practice, which came into effect in December 2021, the maximum non-gold component in a one-kilogram bar is 0.004% – also adhering to the SGE’s non-gold specification standards.
The Four Corners program also questioned the checks The Perth Mint makes in relation to retail customers and re-examined historical customer relationships and non-compliance issues.
The Perth Mint does not and is not able to discuss existing or potential customers. Section 74 of the Gold Corporation Act 1987 precludes us from doing so.
The Perth Mint treats all compliance obligations, including in relation to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), with utmost seriousness and is continually identifying areas for improvement.
The Perth Mint is a complex business operating under a mix of state, federal and international laws. We have acknowledged there have been shortcomings in the past that led to some non-compliance with relevant laws.
The appointment of Chief Executive Officer Jason Waters just under a year ago was the latest milestone in a significant refresh of the leadership team at The Perth Mint. This has included new heads of the Refinery, Treasury and Risk & Compliance areas.
Under Mr Waters’ leadership, The Perth Mint is prioritizing activities to progress its fully funded AML/CTF remediation program through the engagement of additional staff for Know Your Customer (KYC) checks as well as historical customer data remediation, enhanced KYC processes for new clients and an improved technology solution to support customer relationship management.
The independent audit ordered by the regulator AUSTRAC is expected to be completed later this year. It would be inappropriate to comment while that process is underway.
The Perth Mint welcomes the audit, which will support and inform its ongoing efforts to maintain strong AML/CTF measures and continues to actively engage with the auditor.
Jerry, Courtney, Dave, Holley & Laura