If you’re a major gold producer, that’s the headline you don’t need. Add to this the sales supposedly happened during the major heat between Australia and China, and you have a recipe for a lot of embarrassing trouble.
According to ABC Australia’s Four Corners, the Perth Mint sold the gold to China over several years. The gold is said to have contained silver as a dilution. The Shanghai Gold Exchange (SGE) wasn’t happy. Nor is anyone else. If this allegation stacks up, it’s a kick in the teeth to Australia’s gold sector.
According to the Perth Mint, due to China’s prohibition of gold exports, samples were not sent for evaluation. The net result is that the entire sale of gold is now apparently subject to recall.
Worse, the sellers were supposedly aware of the dilution. That’s truly bizarre, if so. Baseline standard for gold is 99.99% pure. That’s not exactly an ambiguous number.
The SGE has every right to be furious. Fair enough. They paid for gold, not “attempted gold” or “theoretical gold”. You couldn’t sell groceries like that, let alone gold. Nor could you get away with selling groceries like that.
Just when you think you’ve seen the dumbest of the dumb, this happens. The best description of this situation is “incomprehensibly stupid”. $9 billion is a lot of stupidity. Why compromise a good reputation for some dismal little dilution for a few bucks. The theory here, and it’s a lousy theory, was that the dilution would save the Mint $620,000. The sheer pettiness of this is appalling.
This level of self-destructive behavior is staggering. The Perth Mint is 124 years old. It’s government backed. Its reputation is now in serious question, and not just from China. Australia has no reason to be pleased, either.
Gold made Australia one of the richest countries in the world during the Australian gold rush. Melbourne was literally built on gold. We still are a major producer of gold.
Even more weirdly, the Perth Mint sells investment and retail gold coins around the world. What possible use is it to the famous brand have quality issues in this market? God knows you don’t expect sanity from the finance sector, but if this grotesque situation is true, it’s truly infantile.
The question now is what China does about it. China expects, and should receive, its $9 billion worth of gold. There’s no question of any alternative to that. In turn, that means arranging replacement and taking back the “gold” sold to the SGE. That’s irritating but doable.
Meanwhile – What does Australia do about a situation which has created a major embarrassment, an indefensible legal situation, and damaged the entire Australian gold sector?
The short answer is simple – No mercy. This is a truly inexcusable situation. Anyone involved in this mess, corporate or individual should be purged from the sector. Jail is a realistic option, and would send the right message. So would heavy personal fines.
Another issue – What if some fool gets the idea to sell “implied iron”, or “wannabe wheat” on the export markets? We need case law in place to bury these morons.
Our very slowly thawing relations with China are another relevant issue. Some halfwits in an office somewhere apparently took it upon themselves to create this situation. Should these people ever be allowed to hold office in an Australian-registered company again? See Section 61 of the Australian Corporations Law for details.
Australian translation – Ratbag bludgers not welcome. Ever.
Fix it.
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
