Guide to gold

Perth Mint Certificate Program

The Perth Mint (based in Western Australia) has a substantial gold fabrication business. A considerable inventory of gold is required for this business.

By arranging the Perth Mint Certificate Program this gold inventory has been financed and provided by investors, who buy these Perth Mint Certificates and thus get unallocated.

Technically the gold belongs to the Perth Mint even though the customers have paid for it in full. The company's balance sheet recognises a liability to the PMGC investor denominated in gold, and this liability is evidenced by the Gold Certificate.

The Guarantee#

Gold Certificates from the Perth Mint have an important extra component in that although the gold is a balance sheet risk of the Perth Mint its liabilities are deemed guaranteed by the Government of Western Australia. This sets it apart.

It offers the only government guaranteed gold certificate program in the world.

The full meaning of the guarantee is a bit difficult to pin down. Quoting from the Perth Mint's own website FAQs:-

"If unallocated is on the balance sheet, doesn't that mean I am exposed if the Mint becomes insolvent? Correct. However, as The Perth Mint is wholly owned by the Government of Western Australia and operates under an explicit Government Guarantee, your exposure is actually to the Government's solvency. Perth Mint Depository clients ultimately accept a sovereign risk exposure to the State of Western Australia."

Also ...

"The Perth Mint operates under a Government Guarantee, which is enshrined in Section 22 of the Gold Corporation Act 1987. Clause 22(1) of the Gold Corporation Act 1987 explicitly states that 'The payment of the cash equivalent of gold due, payable and deliverable by Gold Corporation, the Mint or GoldCorp under this Act and all moneys due and payable by Gold Corporation ... is guaranteed by the Treasurer, in the name and on behalf of the Crown in right of the State.'"

There is little doubt that the current intention of the PMGC guarantee is honestly to underwrite the gold certificates issued by the Perth Mint. But the question for a long term gold owner will be whether governments have historically maintained the strength of their gold denominated commitments.

Generally they have not, and most government commitments have later, and quietly, been reduced by new legislation. That has been the fate of many a piece of paper issued by a government and originally backed by gold, and the phrase "cash equivalent of gold due, payable and deliverable" leaves a degree of flexibility which could see the PMGC guarantee undermined by an Australian government facing financial crisis.


Perth Mint Gold Certificates are not sold directly by the Mint. They are sold through intermediaries, and the indirect nature of the distribution makes them more expensive than they might otherwise be.

The domestic (Australian) distributor charges a purchase commission of 1.75%, and a sale commission of of 0.75%. There does not appear to be a commission discount on larger purchases. There is additionally a cost of 0.30% for buying and 0.30% for selling, payable to the Perth Mint itself together with a modest $A10 certification charge.

This adds up to a minimum round-trip cost for PMGC unallocated gold exceeding 3.1%.

In addition the spread is not advertised. It is probably based on the internationally published 'fix' price, which is a 0.25 cents per ounce additional cost.

Neither the fabrication cost nor the allocated storage charge is published but we believe the allocated storage charge is 1.5% per annum. (BullionVault is 0.12% per annum - which is less than a tenth of the PMGC annual charge)

Please note these charges do vary across national distributors.

There is a minimum investment too - of $10,000 for non-Australians.

Availability for Audit#

Again from the PMGC website ...

"The unsegregated nature of unallocated deposits, which are backed by the working inventory of the Mint, means it is not possible for an individual to audit them."


At BullionVault we're interested in economical allocated gold, owned outright, and especially when it is stored transparently in jurisdictions where the government has no deficit, and therefore no reason to renege on prior promises.

Put that aside, and we would probably be enthusiastic buyers of PMGCs as the best certificate there is. We hope we are seen to be expressing genuine approval of PMGCs in this guarded way. We certainly like them considerably more than other certificates and more than any other unallocated gold program we know about.

Please Note: This analysis is published to inform your thinking, not lead it. Previous price trends are no guarantee of future performance. Before investing in any asset, you should seek financial advice if unsure about its suitability to your personal circumstances.

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