Jason Hommel: To the government of Western Australia

Jason Hommel's open letter to the Authorities of Western Australia is appended here:

Silver Stock Report
by Jason Hommel, May 21, 2008

To:

wa-government@dpc.wa.gov.au Complaints; Premier Alan Carpenter
eric-ripper@dpc.wa.gov.au Treasurer Eric S Ripper
consumer@docep.wa.gov.au Department of Consumer and Employment Protection
pubaff@justice.wa.gov.au Department of the Attorney General
Customer.Service@dtf.wa.gov.au Department of Treasury and Finance
enquiry@era.wa.gov.au Economic Regulation Authority
enquiries@govhouse.wa.gov.au Governor's Establishment
info@audit.wa.gov.au Office of the Auditor General
mail@ombudsman.wa.gov.au Ombudsman
watc@watc.wa.gov.au Western Australian Treasury Corporation
info@perthmint.com.au Gold Corporation / Perth Mint


To various agencies of the government of Western Australia,

You may have a growing precious metals liability of over $880 million Australian dollars at the Perth Mint, which is backed by you, the government of Western Australia.

I have received about 30-50 complaints about the Perth Mint over the last few months from investors who have tried to purchase silver bullion coins, kilo bars, and 100 ounce bars and 1000 ounce bars who have had their orders refused, or delayed.

I have received these complaints because I have an email list of about 80,000 investors who are interested in the merits of buying silver or silver stocks; and I have refered many investors in Asia to the Perth Mint over the years.

The Perth Mint has a certificate program, and they hold up to $880 million Australian dollars worth of these certificates as a precious metals liability which is used for an operating pool of metal.

I don't understand how a Mint can have that much metal at their disposal to be used as an operating pool, yet can run out of metal for walk-in customers, and also have difficulty in redeeming metal for existing customers. It seems to me that the entire purpose of having an operating pool would be to satisfy such orders, yet they are reportedly having difficulty doing so.

I'm further concerned for the government of Western Australia, because my readers have sent to me two copies of two different emails from Nigel Moffett, the Treasurer and manager of the Perth Mint, who has said that investors in the certificates do not need to worry about the solvency of the Perth Mint, but rather the solvency of the government of Western Australia, which has a surplus of $2 billion/year. This seems to be a particularly alarming statement of over-reliance on a government bailout, and I suggest to you that if there is a problem, the sooner you discover it and deal with it, the cheaper it will be to fix it and to bail them out, especially in a market of rising precious metals prices.

Many of us experts in precious metals expect the prices of silver and gold to double perhaps within a year, and if so, the Perth Mint's liability will double, too, which can be particularly alarming if they do not have the metal, but have consumed it in wasteful operations expenses.

I would suggest that you pay particularly close attention to the following statements by the Perth Mint and AGR Matthey:

"The $880 million of precious metals deposited by Perth Mint Depository clients (note 17) was used in operations by Gold Corporation as inventory ($381 million - Note 8b) with the balance in the refining operations of AGR Matthey (Note 8a).
http://www.perthmint.com.au//documents/Annual%20Report%202007.pdf
p. 81, bottom

"Treasury undertakes a leasing program to either lend or borrow precious metal within the terms of a lease agreement between AGR Matthey and approved counter parties."
http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/treasury/services/

As you investigate, I would warn you to not be swayed by slick excuses. Do not be swayed by statements that their precious metals liability is balanced by other liabilities of other entities who also may not have the silver or gold. Ask to see the precious metal that they are supposed to have in their vaults to be used in operations, and don't be deceived, as it can be very costly.

The size of the precious metals liability is particularly alarming to me, in light of the fact that total silver investment demand world wide for 2007 was estimated at 75 million ounces, or about $1.1 billion dollars by the CPM group.

Nobody has reported to me any problem in obtaining any gold, only silver.

But the real reason I'm writing is this:

Please let me know which government agency I should send any information to, and also, let me know so I can direct my readers to complain to the proper agency.

Sincerely,

Jason Hommel

www.silverstockreport.com