About Perth Mint Bullion Blog

This blog discusses The Perth Mint's bullion coins and bars, providing information about our latest designs, mintages, sales volumes and sell outs. On a broader front, we share relevant research and opinions for anyone interested in gold and silver bullion investing.

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Why invest in gold?

Topics [ gold minted bars gold investing gold bull market gold investment ]

Many investors are averse to gold because, as Warren Buffet argues, it’s an unproductive asset. Whereas equities and property are useful and provide a return, gold “doesn’t do anything but sit there”. Consequently, it has little inherent value from his point of view.

So why do some people ignore the advice of the world’s most famous investor and buy gold? In short, they believe it has a valuable role to play in protecting their wealth. How is this so and how can Australian Securities Exchange (ASX) investors take advantage?

Over time, gold is considered to hold its value in real terms. According to the old adage, throughout history an ounce of gold has always bought a man’s quality suit. The World Gold Council illustrates the point with a similar analogy. Back in 1971, USD 25,000 – the equivalent of 700 ounces of gold – was enough to purchase a family house. That amount of cash today would hardly pay for a mortgage deposit, whereas 700 ounces of gold, worth approximately USD 875,000, is still enough to get a foot on the property ladder.

The Perth Mint Gold Cast Bars

Professor Roy Jastram provided statistical evidence of gold’s ability to provide a hedge against inflation in his seminal work, The Golden Constant. His detailed examination of the English and American financial systems between 1560 and 2007 concluded that despite some severe fluctuations, gold has held its value over the centuries, offering an effective means of protecting wealth.

While it would be unwise for any investor to invest solely in gold, it is worth considering the shiny yellow metal for portfolio diversification. Thanks to its ‘safe haven’ characteristics, gold tends to have a low correlation to ‘risk’ assets – that is it tends to go up in value when other asset classes go down. In this way, it can play an effective role in mitigating overall losses during the downside of the business cycle.

History shows that in extreme circumstances, many investors join a ‘flight to quality’. As we saw in 2008 – 2009, when confidence in the global financial system was severely tested, many sold out of what they perceived to be higher risk investments and piled heavily into gold. The subsequent spike in price to more than USD 1,900 per ounce proved to be a great strategy in preserving portfolios values.

Advisors who support the role of gold in a portfolio generally recommend an allocation of somewhere between 5% and 10% to provide ‘insurance’ against similar crashes.

Today, the argument for an allocation to gold is strengthened by uncertainty on several macroeconomic and geopolitical fronts. Commentators see significant risk in the underlying strength of the Chinese economy, protectionist trade policies, Brexit and the forthcoming Euro elections, as well as emerging tensions in the Korean peninsula and the Middle-East region. So called ‘black swan’ events, any unforeseen development with the power to shock markets, remain an ever present possibility.

Fortunately, gold is no longer the preserve of institutions or wealthy private investors. It’s readily accessible in the form of retail bullion bars and coins to Exchange Traded Funds. Servicing clients from ‘mum & dad’ investors, through to Self-Managed Super Funds, institutional and sovereign buyers, The Perth Mint offers a range of different ways to gain exposure to gold – including a wide choice of physical products for delivery or safe storage, certificates, and a product designed specifically for anyone preferring to trade via the ASX.

Perth Mint Gold (PMG) is a warrant providing a right to 1/100th of a troy ounce of gold created by the Mint. Traded on the ASX under the code PMGOLD, its price closely tracks the international over-the-counter market spot price of gold in Australian dollars. While not the only warrant available to investors who prefer to hold gold within their stockbroking account, it does offer an exclusive and invaluable set of reassurances – not least The Perth Mint’s status as a global leader in precious metals.

Established in 1899 to refine Australian gold and to make sovereigns, today’s modern Mint operates across the precious metals value chain, including refining, manufacturing, investing and storage.

As the operator of Australia’s only gold and silver refinery accredited by the London Bullion Market Association (LBMA), clients are assured of the stated weight, purity, and integrity of its gold, silver and platinum products.

During the past 30 years, the Mint has made almost 51 million bullion and numismatic coins, which have the reputation for being among the highest quality coins in the world. In the process, it has added value to nearly 270 tonnes of gold and more than 3,000 tonnes of silver.

Also offering secure storage for investors who prefer not to take physical delivery, its depository currently manages precious metal valued at more than AUD 3.11 billion on behalf of more than 30,000 clients worldwide.

Accounting for a further 2.2 tonnes (at the time of writing) of client gold held on the Mint’s secure premises, PMG is the only ASX gold product which can be redeemed for physical Perth Mint bullion coins or bars, while the option to take delivery can be exercised at any time. But it is the fact that PMG is physically backed and fully West Australian government guaranteed that truly sets it apart.

As with its certificate and depository investment solutions, The Perth Mint backs every ounce of PMG gold it sells on a 1:1 basis with physical metal – ensuring that all metal held on its clients’ behalf is 100% backed. As an institution subject to rigorous corporate governance and control, this undertaking is critical to the Mint’s exemplary reputation.

Investors can also have complete confidence in the Mint’s ability to deliver from the fact that since 1971 it has been wholly owned by the government of Australia’s largest resource rich state, which guarantees its liabilities - including obligations under the PMG Terms and Conditions. Enshrined in the Western Australian Gold Corporation Act 1987, under which the Mint’s operator Gold Corporation was created, Section 22 states:

“The payment of the cash equivalent of gold due, payable and deliverable by Gold Corporation ...  is guaranteed by the Treasurer, in the name and on behalf of the Crown in right of the State." 

The Perth Mint’s government guarantee is unique in the world, offering all investors an unprecedented level of security. Consequently, for those seeking gold with the same ease and convenience of trading in shares, together with one of the lowest management fees associated with any gold exchange traded product, The Perth Mint’s PMG could be the perfect answer.


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GFMS Gold Survey Q1 2016

Topics [ gold bull market ]

RESEARCH AND ANALYSIS

Some key findings of the latest GMFS Gold Survey:

 • Q1 2016 saw a resurgence in Western investment interest in gold, particularly in the U.S. where ETF buying accounted for 330 tonnes.

 • Physical demand for gold tumbled 24% to just 781 tonnes, the lowest quarterly total since the first quarter of 2009.

 • Traditional powerhouses India and China saw plummeting demand, partly due to higher prices, and in India’s case, the budget and ensuing jewellers’ strike which resulted in a 56% year-on-year drop in jewellery consumption.

 • GFMS analysts believe the rally in gold prices during Q1 developed too rapidly and expect a correction to comfortably under $1,200.

 • Thereafter, they anticipate a recovery in demand from the East, predicting gold prices are set to resume their bull run and will be trading around $1,300 towards year end.

Download Gold Survey 2016 Q1 Update & Outlook

The Perth Mint is a Major Sponsor of the GMFS Gold Survey


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Message From Perth Mint Analyst Bron Suchecki

Topics [ gold investing financial crisis gold bull market gold prices gold bear market ]

CONFERENCES

Hi, Bron Suchecki here, precious metal analyst for The Perth Mint.

Gold and silver are at a crucial inflection point right now and if you want to know what the future holds then the 2015 Precious Metals Investment Symposium is a must-attend event.

The Symposium will be held in Sydney on 26 and 27 October and features a great speaker line up including John Butler (Amphora Capital), Keith Weiner (Monetary Metals), Nick Giambruno (Casey Research), Greg Canavan (Daily Reckoning) - and me, explaining Why hasn't the bullion banking system failed?

 

See this podcast interview about my talk.


Now in its 8th year, the Precious Metals Investment Symposium is the largest precious metals event in the Southern Hemisphere, bringing together every aspect of the precious metals investment industry from mining explorers and producers, to bullion companies and other investment products. I look forward to seeing you there - register online here.

Regards,

Bron Suchecki
MANAGER, ANALYSIS AND STRATEGY
THE PERTH MINT



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12 Reasons To Own Gold

Topics [ gold investing gold bull market gold bear market ]

RESEARCH BLOG

Perth Mint finance manager Anthony Hart held the fort over on our Research blog this week with a couple of posts that summarised many of the arguments in favour of owning gold.

Anthony neatly analysed 12 key reasons he considers crucial for investors to consider:

  1. Excessive Global Debt
  2. Low Interest Rates
  3. Money Printing
  4. Currency Wars
  5. Financial System Fragility
  6. Geopolitical Risk
  7. The Rise Of Chindia
  8. Equity Market Valuations
  9. Diversification
  10. Eliminate Counterparty Risk
  11. History
  12. Insurance

In the interest of balance, Anthony will shortly be presenting reasons not to own gold. To stay on top of the debate, head over the Research blog to read his current posts now.



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Returns Matrix Demonstrates Gold Is For The Long Term

Topics [ gold bull market gold bear market gold bullion prices ]

RESEARCH AND ANALYSIS

Discover the return on a gold investment over a range of timeframes in this Returns Matrix for Gold created by Bron Suchecki. Click to learn how.



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Top 10 Factors Affecting Gold In 2015

Topics [ gold bull market gold market gold bear market ]

RESEARCH AND ANALYSIS

US-based Gainesville Coins recently asked 15 nominated experts (including our own Bron Suchecki) which way they think the gold market is going.

As you might expect, the responses they received ranged from bearish to bullish - and everything in between!

Rather than attempting to draw any firm conclusions, Gainesville analysed their experts’ viewpoints for the most frequently cited factors affecting the price of gold.

Presented as insights that “may help you formulate your own personal financial strategies”, here are their top 10 factors affecting gold in 2015.

  1. Real interest rates, specifically the Fed raising its key rate
  2. Generally bearish on paper money and central banks
  3. Inflationary (or deflationary) pressures
  4. Geopolitical strife and global economic instability
  5. Strength or weakness of the U.S. dollar
  6. Growth in the developing world and emerging markets
  7. Monetary easing (i.e. currency devaluation) in Europe and Japan
  8. Strong demand from China and India
  9. Performance of the equities market
  10. A boost in mining output from falling energy costs

You can read the full responses from each of the 15 experts involved in Gainesville Coins’ recent survey here.



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