Friday 7th April, 2006 AD

A TYPICAL BULLION BAILMENT

Early Thursday morning, Zurich, Switzerland : 

Although spring is slowly arriving, you wouldn't think it, stepping out into the icy cold morning air. Pockets of snow can still be seen all around this pristine, clean city. We make our way bycab from Bahnhofplatz, over the Limmat River and towards the Airport district of Kloten. 

"We'll have our work cut out this morning" I mumble to my helper, mostly thinking out loud. In heavy traffic, the route taken by our taxi is well familiar; in-fact this is the second large bullion bailment in just a few months. Today we will be auditing and bailing into the vault several metric ton of silver bars, and thousands of oz's more of gold. 

As always, security at the vault company is ultra-tight. For Anglo Far-East, each bullion bailment represents several weeks of orchestrated planning, together with the co-ordination of numerous bullion swaps through several Bullion Banks, our point of delivery Refinery, the Security Transport and Vault companies, an Independent Trustee company, Swiss Customs officials and the attending Auditor. 

We stand briefly in the cold, as the large security door is electronically unlocked and opened, allowing us access to an internal secure holding area. At least four days earlier we have confirmed the full names and passport numbers of those who would be attending this morning, and this has been independently confirmed and authorized by a independent, 3rd Party Trustee company (1). After a couple of minutes we are joined by the auditor representing the Trustee company (2). 

A security guard meets us, checks our ID's and then, one by one, logs us through another security door and then quickly guides us through several corridors to a small office. In the office, our passports are checked again and referenced with their files and this week's authorization letters. All being in order, we are signed into the book and issued security passes. 

We are escorted down several flights of stairs, through yet more heavy steel doors, and into the high security section of the building containing several large underground vaults with interconnected loading bays. 

Late Wednesday afternoon, several armored security trucks had made the trip from the refinery in Mendrisio to Zurich and delivered to the vault over 6 metric ton of 1,000 oz (32 kg) silver bars and a batch of 400 oz (12.5) gold bars (3). Over the next few hours, both I and the auditor, independently of each other, will site and verify each one of several hundred bars, their hallmark and bar number, and reference the bars to the refinery's 'bar list'. Each bar is then 'bailed' into pallets, each pallet closed, wrapped, locked and sealed under several numbered seals. Each seal number is verified and recorded by both myself and the auditor. 

Finally as this bailment process is completed, the audited, locked and sealed pallets are moved from the loading dock over into the long-term underground vault. 

In my hotel room later that afternoon, I receive by e-mail AFE's Daily Treasury Price Fix; gold at $584.65 and silver at $11.47, both metals again making 25 years highs (4). "A good feeling, having just locked several million dollars of bullion safely away in the vault," I thought. 

Since this bailment just over 10 days ago (5), gold and silver have continued their steady march higher, silver now up 40% in 3 months. What is driving these metals & how much higher can they run? "There is nothing stopping silver reaching $15 - $18 in the very short term" writes one market observer. Are we facing a short squeeze in silver? Don't miss our upcoming teleconference "The World Of Precious Metals 2006" where we will be tackling these and other questions, details below. 

Sincerely - Philip Judge pjudge@anglofareast.com

(1) Under AFE's custodial governance policy, and the terms of the storage contract with our Security Vault company, no AFE officer can attend the vault without independent authorization from the Third Party Trust company. 

(2) Under AFE's custodial governance policy, and the terms of the storage contract with our Security Vault company, all vault accesses must be by an AFE officer, together with an attendance Auditor and representative of the 3rd Party Trustee company. For Zurich bailment's, auditors are from Grant Thornton, Zurich. The auditor is responsible for independently sighting and verifying all bars being bailed into vault storage and confirming seal numbers. The auditor reports back to the 3rd Party Trustee. 

3) All gold and silver bars held within AFE's vaults are in the form of London Bullion Market Association (LBMA) accredited 'Good Delivery Bars', refined by member refineries of the LBMA. http://www.lbma.org.uk/

(4) AFE's Treasury Price Fix is daily and includes precious metals, base metals, energy and some socks indexes. If you would like to receive this daily by email, please reply to this email with "Price Fix" in the subject line.

(5) Anglo Far-East continues bailing record amounts of allocated gold and silver bars http://www.anglofareast.com/afeannouncementbailment.html