Perth Mint storage options

Discussion of the Gold portion of the Permanent Portfolio

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williswine
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Perth Mint storage options

Post by williswine » Wed Jun 20, 2018 7:33 pm

Have been doing some research into the Perth Mint storage options. They offer a Perth Mint Depository Online account (PMDO) and a Perth Mint Depository Program account (PMDP – unlike PMDO, PMDP is offline so transactions are by phone, email or fax).

I assume the following for a US taxpayer residing in the US but if anyone disagrees, please chime in:
  • No tax is due to the Australian government on gains in the gold in a PMDO/P
  • Perth Mint is not a PFIC so gains in PMDO/P are not taxed favorably (15%) but up to 28% (or is that 28% rate changed under recent tax changes!?)
  • The only reporting in the US (besides reporting any gain or loss on sale on your 1040s) for a PMDO/P consists in filing forms 114 (FBAR) and 8938 (FATCA) if the PMDO/P is above reporting thresholds
  • On form 8938, a PMDO/P falls under the “Custodial Accounts” category
  • On form 114 field 16 (Type of account), a PMDO/P falls under the “Other” category with “Other” meaning e.g. (as needs to be indicated in a box) PMDO/P or “Precious Metals” (there is no guidance here so those are guesses)
  • PMDO has a “SEC” (account) number or client code (not sure what “SEC” means) while PMDP is a.k.a. “OL” (presumably for OnLine) and presumably also has an account number that has to be reported on forms 114 and 8938
I have a few questions that I hope some of you can answer based on their experience with either PMDO or PMDP.

In PMDO or PMDP, can orders be placed in USD rather than in AUD at Perth Mint Spot gold pricing?

In PMDP, I see that “Market orders and Buy orders” (and “Market orders and Sell orders”) on the LBMA benchmark prices attract an additional fee of $3 ($2, resp.) per ounce of gold (I presume compared to orders on the Perth Mint Spot price per https://www.perthmint.com/metalPrices.aspx that do not attract either of these fees). These orders also require a minimum trade size of 100oz gold. Questions:
  • I could see preferring LBMA benchmark pricing in USD to Perth Mint Spot Gold pricing in AUD due to the currency exchange risk (see significant difference between the two e.g. in red and blue in the top chart of page 7 at https://www.perthmint.com/documents/Bro ... update.pdf or the top chart of page 16 at http://www.perthmint.com/documents/PMG_2010_Final.pdf) but if both are traded in USD, why would a US investor prefer Perth Mint Spot pricing to LBMA benchmark pricing (besides not having to pay the extra $3/$2 fees per ounce of gold)? Aren’t the two tracking the same gold price?
  • I understand that the London AM fix, the London PM fix or the Perth Mint Spot price are all set once a day to provide a historical record but (unless orders are placed exactly when those prices are recorded) those prices are not what is used to trade, i.e. orders are priced dynamically throughout the day (using intra-day prices), correct?
In the PMDP Product Information Statement (https://www.perthmint.com/documents/Bro ... update.pdf), section 8, item 3.2 reads:
(a) Gold Corporation shall endeavor to execute Client Buy Orders, Sell Orders, Collect Orders or Payment Orders on behalf of the Client in accordance with reasonable instructions pursuant to the terms of this agreement and the Product Information Document.
(b) Gold Corporation is under no obligation to execute Buy Orders or Sell Orders from the Client for any Precious Metal and Gold Corporation does not guarantee the existence of a market or a buyer or seller for the Client’s Precious Metal.
There are other items under 3.2, but subitem (b) is unclear to me: could anyone offer an interpretation?

Is it possible for Perth Mint to report the highest value of a PMDO/P for the past year as well as that at the end of the previous year (as required for US reporting)?

Is there a process to change the bank account used to wire/receive funds to/from one’s account at Perth Mint? If so, what is it like? I couldn’t find it described anywhere.

The PMDO terms and conditions (in https://www.perthmint.com/documents/201 ... Client.pdf) read under 8.2 that “We may charge a fee for transferring funds from your Account to your Bank account.”: there is no such fee mentioned in the PMDP terms and conditions. How much is this fee in the PMDO?

The documentation indicates an investor is to transfer funds to Gold Corporation’s account at JP Morgan in NYC and it provides a SWIFT code for this. I assume there is no need to provide this SWIFT code for an intra-US wire transfer: does anyone know?

That’s all for now :)
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