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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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Sales of 2012 Kookaburra Coin With Dragon Privy Mark To Start 1 June

Topics [ silver bullion coins Australian Kookaburra ]

BULLION BARS AND COINS

If you were unable to secure this year’s 1oz Australian Kookaburra silver bullion coin (500,000 mintage sold out), here’s another opportunity to add this iconic design to your investment coin portfolio.

We’re delighted to announce availability of a 1oz Australian Kookaburra silver bullion coin featuring a privy mark in recognition of the 2012 Year of the Dragon.

The coin’s reverse portrays a bold interpretation of a kookaburra standing on tree branch with gum leaves. To the left of the bird is a privy mark depicting a miniature portrayal of the Chinese dragon seen on this year’s Australian Lunar gold bullion coin series.

The Perth Mint will make no more than 80,000 of these Australian Kookaburra with Dragon privy silver bullion coins for worldwide release.

A limited number will be available for sale on www.perthmintbullion.com from 1 June 2012. Sales will commence on the opening of our Treasury division at approximately 8.30am Western Standard time.



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Why Has Gold Fallen In Price And What Is The Outlook?

Topics [ gold bullion prices ]

WHAT OTHERS ARE THINKING

GoldCore explains the factors behind the recent fall in the gold price.

"There are few a factors that have led to gold falling in price in recent weeks despite the worsening Eurozone debt crisis and deteriorating economic data from the US and elsewhere.

Gold Has Fallen Due To:

• Gold’s recent weakness is in large part due to a period of recent dollar strength. While gold in dollar terms has fallen by 25% ($1,920 to $1,540), gold in euro terms is only down by 14% (from €1,374/oz to €1,210/oz).

• Oil weakness – since the end of February, oil has fallen from $111 a barrel to below $95 a barrel (NYMEX) today. Gold and oil are often correlated and many buy gold to hedge inflation that comes from higher oil prices.

• Gold’s weakness may also have been due to wholesale liquidation in all risk markets due another bout of "risk off" which has seen global equities and commodities all come under pressure.

• Physical demand from retail investors in the western world has slowed down as did demand from India in recent weeks due to the increase in taxes on bullion (since removed).

• Much of the selling has been technical in nature – whereby more speculative elements on the COMEX who trade gold on a proprietary basis have been selling gold due to the recent price weakness and the short term trend clearly being down. This has led to speculative longs now having their smallest positions since December 2008.


Gold’s Outlook Remains Positive Due To:

• Central bank demand remains robust and central banks are set to be net buyers of gold again in 2012.

• Demand for physical gold remains robust in much of the Middle East, Asia and the Far East with strong demand seen in particular in Turkey (for Middle East) and in Hong Kong (for China).

• Continuing zero percent interest policies in major developed economies and negative real interest rates remain the primary driver of the gold market. As long as there are negative real interest rates in the US and in most western economies, gold is likely to continue to rise in value.

• The problems in the Eurozone are far from resolved and the short term panacea policy ‘solutions’ of recent months have almost certainly made matters worse and increased the risk of contagion in the Eurozone whereby periphery nations are forced to revert to national currencies or the euro itself is devalued and debased.

Conclusion:

GoldCore continues to believe that gold may rise to the inflation adjusted high of $2,400/oz in the coming years. Given the risk of contagion and currency devaluations in the Eurozone, euro gold should rise to above €2,000/oz in 2013.

Gold remains an essential diversification and those who have a 10% allocation to gold bullion will be rewarded again in the coming months as macroeconomic, monetary and systemic risk is likely to become elevated again."



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World Gold Council: Gold Demand Trends First Quarter 2012

Topics [ gold market gold investment ]

RESEARCH & ANALYSIS

The main highlights from the World Gold Council’s latest report are as follows:

• China’s investment and jewellery demand reached 255.2t up 10% on the previous year’s levels. Investment demand recorded strong growth with a quarterly record of 98.6t, up 13% from Q1 2011, demonstrating investors’ continued need to preserve wealth amidst ongoing concerns over inflation. Jewellery demand in China also increased significantly to 156.6t, accounting for 30% of global jewellery demand making China the largest jewellery market for the third consecutive quarter.

• Gold demand in India was affected in Q1 2012 by a number of factors; a new tax on gold jewellery, two increases in the import duty for gold and weakness and volatility in the rupee. Jewellery demand fell 19% to 152.0t from Q1 2011. Investment demand was down 46% from the previous year at 55.6t. In May, the government withdrew the new tax on jewellery and the market is already responding positively.

• Central banks across the globe continued the now established trend of net purchasing with demand in Q1 2012 reaching 80.8t. Demand was driven by Eastern Europe with Russia and Kazakhstan adding to their holdings and accounting for a substantial amount of the purchasing. Mexico’s central bank made the largest single purchase of 16.8t. The main driver for this demand by emerging market central banks is the need to diversify their holdings.

• First quarter demand for ETFs and similar products totalled 51.4t, equivalent to a value of US$2.8bn; in stark contrast to the first quarter of 2011, when the sector witnessed net outflows.

Download Gold Demand Trends Second Quarter 2011.



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Betting $1 Million On Gold Hitting $2,000 Before $1,000

Topics [ gold prices gold bear market ]

COMMENT

With gold closing on $1,500, Peter Grandich recently reactivated his December 2011 bet that gold would hit $2,000 before it reached $1,000.

However, there is a flaw in the nature of the bet as it is possible for someone taking the bearish side of the bet to hedge themselves against any loss, nullifying what Mr Grandich is trying to achieve. The hedging strategy for the bear, assuming for simplicity the price at the time the bet is entered into is $1,500, is to buy 2,000 ounces at the time of the bet and then sell that gold when it first reaches either $1,000 or $2,000. Below are the cashflows for either outcome.

Of course the bear neither loses nor makes any money from the bet. The only risk they really take is reputational should they lose, but then they definitely benefit from a marketing exposure point of view (on the basis that any publicity is good publicity), from being respected for taking the bet, and also the chance they could win as well.

I would note that a bull could likewise hedge themselves by selling 2,000 ounces of gold and then later buying it back. However I am not accusing Mr Grandich of such a cynical marketing ploy, as I think it is clear he was/is willing to risk a real loss of his personal money on this bet, as evidenced by his December 30 post where indicated that he would assign his winnings to the many charities he is involved with.

So, I think it is back to the drawing board for the bulls to construct a bet that will really hurt (financially) a bear.



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One Million Mintage For 2013 Kookaburra Silver Bullion Coin

Topics [ silver bullion coins Australian Kookaburra ]

BULLION BARS AND COINS

The 2013 1oz Australian Kookaburra will be the first to have a mintage cap of 1 million coins.

The decision follows the expansion of the traditional 300,000 mintage to 500,000 for 2012. Despite the added availability, this year’s 1oz silver bullion coin sold out remarkably quickly and so we’ve taken the bold set of doubling the mintage.

There’s a feeling around the Mint that the 2013 artistry works particularly well. In fact it’s has been adjudged internally as one of the stand-outs from the entire program!

For me it recalls the classic two-bird designs of 1994 and 2001 but in the attractive style of Natasha Muhl who created the image for our acclaimed Australian Platypus platinum bullion coin.

Hopefully the market will agree and we’ll be interested in feedback via this blog when the time comes.

The 2013 Kookaburra design is due to be unveiled in mid-August, with availability via the website, bullion desk and international dealer network soon afterwards.

Stay tuned for the first glimpse of what promises to be a spectacular addition to the Australian Precious Metals Coin Program, which will also be celebrating the Year of the Snake in 2013.



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IMF To Buy Gold? Not

Topics [ gold market gold ]

IN THE NEWS

A great example today of the children’s game Chinese whispers (or Telephone for our America friends) and poor journalism in the gold blogosphere (thinking the internet is about journalism is idealistic of me, I know). I’ll focus on Zero Hedge as the example because they are a high profile website from which many other bloggers and commentators pick up stories. Knowing how influential they are, you’d expect them to at least apply some basic journalism fact checking before breaking news.

Yesterday Zero Hedge posted the following heading “Meet The Latest Converted Gold Bug: The IMF”. Its key “news” is this republished quote from a Commodity Online post, also dated the 14th:

“The International Monetary Fund (IMF) is planning to purchase more than $2 billion worth of gold on account of rising global risks.”

Rather than being the source, Commodity Online’s story is just a rehash of a May 12th Bloomberg story. Note that the above quote is Commodity Online’s take on the Bloomberg story, not a direct quote from the IMF.

Zero Hedge were aware of this, because they also quote directly from the Bloomberg story, but that is where they left what is quite significant news. As Zero Hedge themselves noted, the IMF had previously been selling its gold. You would think such a major policy shift would at least warrant some more investigative work. Apparently not.

What I found interesting in the Commodity Online story is this line: “Bloomberg quotes a report by an IMF staff while also adding that a $2.3 billion gold purchase is in the planning.” So this is Commodity Online’s take on the Bloomberg story but they don’t provide any more details on why the IMF has made such a dramatic policy shift.

I want to know more, so I go to the Bloomberg story. However, there is no mention of the IMF planning to buy gold in that story. The only mention of gold is “a profit of about $4.9 billion from gold sales”. Sales, not purchases. So where did Commodity Online get the purchase idea from? I’m aware Commodity Online is an Indian based operation, so I’m starting to think there may have been some language misinterpretation going on. But maybe they got it directly from the IMF.

The Bloomberg article doesn’t provide any direct link for their IMF quotes, just saying that “IMF staff wrote in a report released today.” So off to the IMFs press release page for something prior to May 12th. There we find “IMF Executive Board Reviews Fund's Income Position and Sets Margin for Lending Rate for Financial Years 2013-14” which makes reference to the “estimated net income of $2.3 billion” as reported in the Bloomberg article. There is no mention of gold in the press release, but two links are provided at the bottom, the key one being the 39 page “Review of the Fund’s Income Position for FY 2012 and FY 2013‒14”. A text search finds the direct IMF quotes Bloomberg used in its article on page 13, so I know this is the report that Bloomberg based their story on.

So I eagerly type in “gold” into the text search box, anticipating a revelatory explanation by the IMF for this significant policy shift in respect of gold, from which I will write today’ Blog Watch post. There are 46 references to gold, but alas, not one about gold purchases. The only references to gold are about gold sales, specifically:

“Gold profits portfolio. A separate work program is underway, in the context of the work on the new Rules and Regulations for the expanded investment authority of the IA, to establish an endowment of SDR 4.4 billion funded with gold sale profits. The IA currently also includes gold windfall profits of SDR 2.45 billion, pending a partial distribution of the general reserve to the membership of SDR 0.7 billion to be funded with these resources and further discussions later this year on the use of the remaining gold windfall profits.10 Staff proposes that, consistent with the approach taken last year, the earnings from this portfolio (about SDR 31 million) be retained in the IA pending further discussions by the Executive Board. No Board decision is required for reinvestment of the earnings.”

Did your eyes just glaze over? And that’s the most exciting bit.

So what we have here is a dry Bloomberg story about the IMF and precautionary reserves with a side reference to gold, which is picked up and misinterpreted by Commodity Online, which is blindly picked up by Zero Hedge who doesn’t investigate it further because it confirms their pro-gold editorial position.

I’ll let Wikipedia make the final point “how easily information can become corrupted by indirect communication. The game has been used in schools to simulate the spread of gossip and its supposed harmful effects”.



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