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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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What is 'conflict-free' gold?

Topics [ responsible gold gold refining gold refinery gold trading gold ]

Since 2006 when Leonardo Di Caprio’s hit feature film Blood Diamond exposed the dark side of mining in east African countries rich in natural resources, the trade of precious stones, minerals and other commodities has come under increasing public scrutiny.  

Best evidenced by the growing number of ‘fair trade’ products worldwide, this global concern with ethical sourcing is steadily on the rise as consumers and organisations become increasingly focused on corporate transparency, responsible supply chain management and sourcing. 

While huge leaps have been made in recent years in the prevention of conflict mining, it remains a global issue – particularly for gold. In response, leading industry players including The Perth Mint have implemented strict supply chain policies as part of their commitment to responsible metals. 

Conflict minerals

Investigations into revenue obtained from the trade in natural resources including gold, tin, tantalum and tungsten in the Democratic Republic of Congo (DRC) and neighbouring countries identified links to organised crime and the finance of corrupt officials and organisations.

In fact, of these ‘conflict minerals’, gold is considered the least controlled due to its high worth and the ease at which it can be moved across borders. The DRC government estimates that while more than 20 tonnes of gold are extracted by artisanal miners each year only about 10,000 ounces are officially exported. Meanwhile, it is estimated that more than half of Congo’s artisanal miners are exploited by local armed groups and non-state security forces present at gold pits around the country. (IPIS Research, 2015.)

In 2010 US Congress passed the ‘conflict minerals’ law which legally requires publicly-listed companies to check their supply chains and take steps to address any risks associated with procurement of these materials. Part of a wider move towards responsible sourcing, this was key in the development of an internationally recognised due diligence framework by the Organisation for Economic Cooperation and Development (OECD) which aligns with guiding principles outlined by the United Nations.

In 2012 the London Bullion Market Association (LBMA), one of the world’s largest distributors of precious metals to global markets, set up a Responsible Gold Guidance based on the OECD framework.

Dore bars


To be accredited as a LBMA ‘good delivery’ refiner and issued a LBMA Responsible Gold or Silver Certificate, refiners must undergo comprehensive yearly audits to ensure compliance with high standards of anti-money laundering and combating terrorist financing practices.

These include the establishment of systems and processes covering:

• Company management systems

• Identification and assessment of risks within the supply chain

• Management strategy to respond to identified risks

• Independent third-party audit of supply chain due diligence

• Supply chain due diligence reporting

As the fight against conflict gold and its global impact continues, the processes in place at The Perth Mint Refinery, as Australia’s only accredited LBMA refiner for both gold and silver, remain as relevant as ever for producer and investor clients around the world.       

Committed to responsible metals

The Perth Mint Refinery takes the risk and impact of handling precious metals mined within conflict affected areas extremely seriously.

“As the largest gold refiner in the southern hemisphere, we have a responsibility to do everything within our power to reduce the global impact of conflict metals,” Refining Operations Manager Nathan Edwards said. 

“We are aware that gold or silver mined in high risk countries has the potential to make its way to our refining operations in Western Australia. That’s why we’ve aligned our practices with the LBMA and OECD, to ensure we uphold and exceed global standards in due diligence and responsible sourcing.”

The Perth Mint was one of the first three gold refiners in the world to be certified under the internationally recognised Conflict-Free Smelter Program, now the Responsible Minerals Assurance Process (RMAP), which provides credible third-party valuation of a smelter's procurement activities.  

Our Responsible Metals and Supply Chain Policy is committed to ensuring all gold handled at The Perth Mint Refinery is obtained from conflict-free sources – from the moment it enters our high-security facility in Perth to when it leaves as 99.99% pure gold bars. 

Immediately after delivery, the origin of each batch is checked for compliance with our responsible metals policy before being weighed and entered into our barcoded metal deposit system. This facilitates tracking throughout the entire refining process.

For further information and to view our audit history, please visit our website.

Resources

https://ipisresearch.be/publication/analysis-interactive-map-artisanal-mining-areas-eastern-dr-congo-2/
https://www.globalwitness.org/en/campaigns/conflict-minerals/dodd-frank-act-section-1502/
https://www.pri.org/stories/2017-06-23/tracing-conflict-gold-democratic-republic-congo



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Who owns the world's gold?

Topics [ gold market gold analysis gold trading gold ]

USD 9.3 trillion: That’s the estimated market value of all the gold ever mined, just over 190,000 tonnes, based on an end of August 2019 gold price of USD 1,528.40 per troy ounce.
(Source: LBMA PM Gold Price

The owners of this gold fall into four broad categories:

Jewellery Buyers - This is the largest category of demand, accounting for almost 50% of gold ownership. Jewellery demand is predominantly driven by rising real incomes in Asia and the Middle East, where gold is seen as a form of wearable wealth.

Central Banks - Central banks own gold as part of their foreign exchange reserves. Collectively, central banks around the world own more than 30,000 tonnes of gold.

Investors - Investors buy gold in physical bar and coin form, as well as through depository services, such as those offered by The Perth Mint, and via Exchange Traded Products. It is estimated that in excess of 40,000 tonnes of gold are held by private investors worldwide.

Industrial Users - Gold is used in a range of industries from medicine and electronics to space technology. Industrial users are estimated to own more than 25,000 tonnes of gold.



Who buys gold now?

The annual GFMS Gold Survey offers a great insight into gold demand trends. In 2018, purchases of gold were as follows:

  • Jewellery demand was 2,129 tonnes
  • Bar and coin demand was 1024 tonnes
  • Central banks made net purchases of 536 tonnes
  • Industrial fabricators purchased 391 tonnes
  • Net flows into gold ETFs totalled 59 tonnes


Demand across the first eight months of 2019 has been driven by central banks, which continue to diversify away from the US dollar. This trend was perhaps best summarised by an August 27 Bloomberg article, Central Banks Just Love Gold and It’s Going to Stay That Way. The article focused on a report by Australian and New Zealand Banking Group (ANZ) which estimates net buying of gold by central banks will be more than 650 tonnes this year.

There is also increasing demand for gold ETFs which have built total holdings back towards 2013 levels.



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Physical gold demand a bright spot in Q3

Topics [ gold bullion gold ]

Global gold demand disappointed in Q3 2017 according to the World Gold Council’s latest Gold Demand Trends, but physical buyers bucked the trend with a solid increase in investment coin and bar purchases.

At 915 tonnes, total demand fell 9% compared the same period last year, with particular weakness seen in Indian jewellery volumes.

Stalling inflows into gold-backed exchange-traded funds (ETFs) also negatively impacted Q3 figures, the report’s authors said. Reasons cited for slowing ETF deposits included investors’ reluctance to bet against soaring stock markets.

Physical gold demand a bright spot in Q3

However, many used their strategic ETF holdings to complement their equity positions as a hedge against any possible downturn, they said.

On a further positive note, gold bar and coin demand increased by 17%, albeit from relatively weak year-earlier levels.

The report noted that China drove much of the growth in physical gold products, with investors buying on the dips to help the world’s largest gold consumer clock up its fourth consecutive quarter of growth.

“It was a tough quarter for gold demand,” according to Alistair Hewitt, Head of Market Intelligence at the World Gold Council. “India was coming to terms with GST and anti-money laundering regulations and, although we saw ETF inflows at 19 tonnes, they were significantly lower than last year.

“But there were some real bright spots: retail investment demand in China grew for the fourth consecutive quarter; the Turkish and Russian central banks added to gold reserves; and, after years of declines, we also saw increased use of gold in technology, supported by the demand for high-end smartphones.”

The Perth Mint finished the quarter on an upbeat note with a rebound in sales of gold bullion coins and minted bars driven by the launch of the Australian Lunar coin series for 2018 and healthy exports to China.

The Gold Demand Trends Q3 2017 is compiled with data provided by independent precious metals consultancy Metals Focus.



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Hot bullion coin offers new opportunity to enjoy Dragon and Phoenix design

Topics [ bullion coins gold gold bullion coins gold coin ]

Admirers of The Perth Mint’s China-inspired Dragon and Phoenix design have a limited opportunity to acquire a new gold bullion coin featuring both auspicious mythical creatures.

Their intricate depictions surrounding the representation of a flaming pearl appeared in 2017 on a highly sought-after 1oz silver bullion coin, and two outstanding high reliefs for collectors.

 

Bearing a 2018 year-date, the new coin is struck from 1oz of 99.99% pure gold and features The Perth Mint’s trademark bullion finish with polished design elements on a frosted table.

Perfect for those who require bullion in the trusted form of Australian legal tender, the coin also offers buyers guaranteed rarity with a strict limited mintage of just 5,000.

To take advantage of the Dragon and Phoenix 2018 1oz Gold Bullion Coin, registered customers are invited to place orders on www.perthmintbullion.com while stocks last. Purchasers in Australia may also call customer services on 1300 201 112.

International buyers should contact our Hong Kong distributor LPM as soon as possible.



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Gold a star performer in Australian minerals exploration

Topics [ gold ]

As gold adds shine to Australia’s lacklustre minerals exploration sector, what and who is driving the upsurge in activity?

Gold exploration rose 30 per cent year on year in the March quarter to make up 46 per cent of Australia’s total minerals expenditure, an Australian Government report released last week revealed.

Western Australia is still the core of the nation’s $155 million gold exploration activity, attracting 75 per cent of expenditure in the sector.

The diggers and dealers have been spurred by a forecast increase in world gold consumption. The June Resources and Energy Quarterly published by the Department of Industry, Innovation and Science predicts global demand to rise by 1.8 per cent in 2018 to 2,484 tonnes.

Our ancient desire for gold jewellery continues to be the overwhelming factor behind increased appetite for the precious metal. Jewellery accounts for 80 per cent of total fabricated demand and the report forecasts jewellery consumption to increase by 3.5 per cent in 2017.

Continued economic growth in India and China — the world’s two major jewellery markets — is predicted to support higher discretionary spending on gold into 2018. 

Technology linked usage of gold is also driving increased demand. 

Consumption for electronics rose by 3.7 per cent year on year in the March quarter. Growth in this use for gold, including wireless technology for smartphones and gold bonding wire, is forecast to be 2.2 per cent in 2017 taking the volume to 261 tonnes.

The value of Australia’s annual gold exports is forecast to total $16.5 billion in 2017–18 and $17 billion in 2018–19. 

Export volumes are forecast to rise by 4.5 per cent in 2018-19, reaching a peak of 334 tonnes. 

On the supply side, global mine production is forecast to rise by 1.5 per cent in 2017 to 3,305 tonnes. World production is then expected to plateau over the next three years, but this is dependent on new projects reaching commercial production.

By contrast to what is happening in gold exploration, investment in Australia’s mining sector as a whole has “declined rapidly in recent years and is expected to continue to do so”, said Mark Cully, Chief Economist at the Department of Industry, Innovation and Science, in his foreword to the report. He said this was evident in the reduction in overall mining industry employment. 



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How Is Gold Produced?

Topics [ gold investing buy gold coins gold coins gold bullion bullion coins gold gold bullion coins gold bullion bars buy gold ]

PRECIOUS METAL SERIES – 7

The days when miners could dig or pan for nuggets of gold are largely gone. Today, gold is generally extracted from the Earth’s crust as microscopic particles. 

Estimates put the amount of gold in the Earth’s crust at just 11 parts per billion! To recover a single ounce of gold, many tonnes of material must therefore be blasted and processed.

Gold mines sell unrefined gold in the form of doré bars. Australian doré bars are usually composed of between 70-80% gold and 10-15% silver. The lion’s share of these rough bars are processed into fine gold at The Perth Mint, which operates the largest LBMA-accredited gold refinery in the Southern Hemisphere.

Each doré bar first goes through a chlorine refining process, also known as the Miller Process. Originally conceived by Francis Bowyer Miller in Sydney during the 1860s, the Miller Process involves bubbling chlorine gas through molten doré gold so that silver (and most other metals) react with the chlorine to form silver chloride as slag on the top. The resulting gold is 99.5% pure and typically it’s cast into bars weighing about 400oz for use in wholesale markets.

The Wohlwill process is used to increase purity further. A casting of 99.5% pure gold is lowered into a bath of hydrochloric acid and then has an electric current passed through it. Acting as an anode in this electrolytic refining process, the casting dissolves and then deposits on a cathode with a purity of 99.99%.

The resulting cathodes are melted, granulated and then the granules are used to measure out exact weights of gold for casting into bar sizes from 1oz up to 50oz for retail investors.

How Is Gold Produced?


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