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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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Don’t Mistake Perth Mint Certificates For Paper Gold

Topics [ unallocated depository allocated store bullion store gold ]

DEPOSITORY SERVICES

I have a friend I’ve known ever since I first started in the gold business in 1994. I’m quite fond of him and he is ever willing to tell me what he thinks about the gold market.

He does tend to be a bit opinionated at times, which is generally not a problem, except that he often gets his facts wrong and doesn’t like it when I correct him. He also has a penchant for conspiracy theories and can tend to be a bit irrational, but he is always entertaining. You may wonder why I bother associating with him.

Well, you may be surprised to know that you are friendly with him as well.

His name is Mister Internet.

Paper gold is one of Mr. Internet’s favourite topics. I made the mistake of asking him about it the other day:

“Oh you don’t want anything to do with paper gold. Don’t you know, all the bullion banks are leveraged 100:1 and the fractional backed system is going to default and crash any day, so you should only hold allocated. But wait, I did hear some stories of unnamed people who have had unnamed banks refuse or delay giving them their allocated, so maybe that is not safe either? I suppose they are right when they say ‘if you don’t hold it, you don’t own it’. But then you have to worry about it getting stolen, especially if you have more than just a few ounces. In that case …”

I had to cut Mr. Internet off there, as he starting rambling on about “midnight gardening”, and putting a metal pipe above your buried “stash” in your backyard to confuse metal detectors, and using decoy safes and so on.

It’s enough to make any Perth Mint Certificate holder question their decision to hold precious metal with the Perth Mint.

I understand where Mr. Internet is coming from. Banks appear to be involved in scandals on a regular basis and MF Global made people question the idea that client funds can’t be touched. It all resulted in a loss of trust.

And if you are not comfortable with the risks of personally storing gold and silver (and nothing is free of risk), then it very much comes down to a question of trusting the person holding your precious metal.

But there is a big difference between paper gold accounts with a bank and a Perth Mint Certificate, which just happens to be made out of paper.

Mr. Internet is right about banks operating fractional reserve precious metal accounts, even if his figures are wrong. Jeffery Christian of consultancy CPM Group confirms that bullion banks loan up to 10 times as much metal as they have on deposit (with AIG going as far as 40 times).

This should come as no surprise - they are banks after all - and lending out your deposit is what banks do. No one expects a normal bank to have a vault full of dollar bills backing their deposit liabilities one for one. Neither do bullion banks.

"The Perth Mint, however, is not a bank.
We do back our deposit liabilities one for one
with real gold and silver."

The Perth Mint, however, is not a bank. We do back our deposit liabilities one for one with real gold and silver. We don’t lend client metal, we don’t speculate on the price, and we don’t get involved in risky derivative transactions. We are a simple refinery and mint business, turning mined gold and silver into bars and coins for investors.

Even though the Perth Mint isn’t involved in banking activities, Mr. Internet has on occasion accused us of not backing our unallocated accounts, saying that we just take people’s money and don’t buy any gold. My appeals to our internal and external audits, plus oversight by the Auditor General of Western Australia and the Treasury department of Government (additional supervision no public company is subject to), often don’t assuage his fears.

In that case I ask Mr. Internet to think it through logically. To refine, mint and ship $13 billion of gold around the world each year we need a lot of metal in our refinery, factory and vaults. Without gold we can’t make anything – we don’t have a business. We don’t care for dollars, we need gold. So there is no incentive for us to keep investors’ money and not buy gold: the more gold we have the more coins we can make. The fact is we have every incentive to NOT hold dollars.

We are more than happy to sell our bars and coins to those who feel better holding it themselves, and that is our main line of business. But we created the Perth Mint Certificate Program for those who wanted the option of a safe offshore storage facility.

We take that responsibility quite seriously. Whether you hold unallocated, pool allocated, or allocated, you can be sure that while your Perth Mint Certificates may be made out of high quality security paper, they certainly aren’t “paper gold”.

P.S. – Mr. Internet is a plagiarism of Benjamin Graham’s (the father of value investing) Mr. Market – “a fellow who turns up every day at the stock holder's door offering to buy or sell his shares at a different price. Usually, the price quoted by Mr. Market seems plausible, but occasionally it is ridiculous.” (Apologies to Mr. Graham for my poor copy of his allegory).



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Introducing the 2014 Australian Bullion Coin Program

Topics [ Australian Platypus 2014 Year of the Horse Australian Kangaroo platinum bullion coin Year of the Horse silver bullion coins Australian Lunar Australian Koala gold bullion coins Australian Kookaburra ]

BULLION COINS AND BARS

Details of The Perth Mint’s 2014 Australian Gold, Silver and Platinum Bullion Coin Program are officially unveiled today.

Watch the exclusive launch video.

F A S T  F A C T S

Designs

Australia’s Bullion Coin Program features five new designs for 2014. The latest imagery portrays iconic native wildlife on the Kangaroo, Kookaburra and Koala coins, while beautifully depicted horses appear on the Lunar series.

Release Schedule

 

Limited Mintages

A number of coins in the 2014 program are subject to limited mintages, including:

 

Detailed Brochures

Struck by The Perth Mint from 99.99% pure gold and 99.9% pure silver, these Australian bullion coins are offered by The Perth Mint in a wide variety of sizes. Download the 2014 Gold and Silver Bullion Brochures for comprehensive details.

   click to download 2014 Silver Bullion Brochure

Register Now

Customers (in Australia and Asia) wishing to purchase coins online from The Perth Mint’s bullion sales site (www.perthmintbullion.com) are required to register in advance. If you do not already have an account, please take a few minutes to register now so that we can activate your account in time for the beginning of the release schedule commencing 2 September.

Alternatively, visit the Bullion Trading Room at The Perth Mint or telephone 1300 201 112 (Australia Only) or +61 8 9421 7218 (international callers) to place your order. (Please note: a limit of twenty 1oz silver Lunar coins and five 1oz gold Lunar coins applies to retail customers purchasing direct from the Mint.)



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INTERVIEW: Perth Mint Prepares For New Product Launch

Topics [ 2014 Year of the Horse silver bullion coins Australian Lunar Australian Kookaburra gold bullion bars ]

IN THE NEWS

Debbie Carlson of Kitco News spoke to Perth Mint Sales & Marketing Director Ron Currie at the ANA's World's Fair of Money currently on in Chicago. Read her report:

Perth Mint will launch new products in September, including a new edition in its Lunar bullion coin series, a director there said on Thursday.

Ron Currie, Perth Mint sales and marketing director, said the mint is gearing up for the Sept. 1 launch of the Lunar horse, which is a limited edition bullion coin in both gold and silver. Last year’s Lunar snake sold out “in a matter of days,” he said.

Additionally, a new silver Australian Kookaburra silver coin will be released, he said, in a limited run of 500,000, and those have sold out for the past six or seven years.

The Perth Mint ends its fiscal year in July, and gold bullion sales for the month were nearly 10,000 ounces over June’s sales, at 56,488.25. July’s silver bullion sales were also above June’s figures, at 697,247.39 ounces. Sales were up 66% and 54% over July 2012 for gold and silver, respectively. Although he did not have full-year sales on hand, he said this year’s sales likely matched last year’s volume.

The Perth Mint saw a surge in April sales after the $200-an-ounce price fall, with gold bullion sales reaching 111,505.06 ounces and silver sales of 1.1 million ounces. Volumes tapered from those lofty levels, but remained elevated. Currie said the sales volume was surprising.

“I thought when the price fell that sales would slow down. But they held up. Our products have a numismatic value as well because of limited mintages. But we’re very pleased with sales,” he said.

On the bullion side, the one-ounce kangaroo remains the most popular coin. They’ve also seen a rise in demand for 50-ounce and 100-ounce silver coins and one-kilo silver bars, he said.


Courtesy of American Numismatic Association

The Perth Mint continues to operate at full capacity and the activity at the mint has been exacerbated by the minting of the new limited edition bullion coins for the September launch, he said. “We’re trying to stock up,” he said.

The Perth Mint has its own refinery, so it hasn’t been affected by any supply shortages. Currie wondered how much of an issue that is, anyway.

“We feel there are a lot of people who talk about short supplies to boost up sales, but frankly we have plenty of supply,” he said.

Currie said demand on the both the bullion and numismatic side is firm, rather than favoring one type or another. “Luckily we have the flexibility in different markets to” respond to changes in trends, he said, noting they do a great deal of business in the U.S. and Europe.

Australian interest rates have fallen recently as the Reserve Bank of Australia has lowered key lending rates. Demand from Australian citizens may have increased, he said, but while interest rates may be lower, prices for other goods and services are higher, offsetting the rate reduction.

The U.S. Federal Reserve, on the other hand, may soon start to wind down its stimulus program, and there are concerns that this might start to pinch gold demand. Currie said that’s more of a short-term issue with gold.

“I don’t think short-term issues are really what people are worried about. It’s the longer term issues people are worried about,” he said.

This article originally appeared on Kitco News. Please note the 2014 Australian Lunar and Australian Kookaburra coin series will be available from 2 September 2013.



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Consumer Demand For Gold Leaps 53% In Q2

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

RESEARCH AND ANALYSIS

The latest World Gold Council Gold Demand Trends report, which covers the period April-June 2013, highlights how recent falls in the gold price have generated significant increases in demand, most notably from consumers in China and India - by far the biggest markets for gold - compared with the same time last year.

Globally, jewellery demand was up 37% in Q2 2013 to 576 tonnes (t) from 421t in the same quarter last year, reaching its highest level since Q3 2008. Demand in China was up 54% compared to a year ago, while in India demand increased by 51%.

Bar and coin investment grew by 78% globally compared to the same quarter last year, topping 500t in a quarter for the first time. In China, demand for gold bars and coins surged 157% compared with the same quarter last year, while in India it jumped 116% to a record 122t. Taking jewellery demand and bar and coin investment together, global consumer demand totalled 1,083t in the quarter, 53% higher than a year ago.

For the tenth consecutive quarter, central banks were net buyers of gold, purchasing 71t, which reinforced the trend that began in Q1 2011. Meanwhile gold held in gold-backed ETFs, which in 2012 accounted for just 6% of the world’s gold demand, fell by just over 400t, driven by hedge funds and other speculative investors continuing to exit their positions.

Overall, demand for gold in Q2 2013 was 856t, down 12% on a year ago, the WGC report said.

Download Gold Demand Trends Q2 2013



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Gold And Silver Refining Explained

Topics [ gold refining gold refinery ]

EDUCATION

The Perth Mint has refined gold since its establishment in 1899. Today, we refine most of Australia’s gold production, gold from surrounding regions, silver, and scrap gold jewellery mainly from Asian countries. Typically, we process between 300 and 400 tonnes of precious metals each year, which makes The Perth Mint refinery one of the largest in the world.

Ever wondered how gold and silver refining is carried out?

Gold Refining

Gold mines process ore using various techniques to produce an alloy composed primarily of gold and silver, which is called a doré bar. The composition of doré can vary significantly between mines, but generally the gold doré bars The Perth Mint processes are composed of between 70-80% gold and 10-15% silver.

Doré bars are first weighed and melted to ensure the metal is homogenous, that is, that there are no pockets of high or low purity within the bar. A sample is taken from this melted doré and assayed to determine the exact amount of gold and silver present.

The miner then receives an outturn, which is a statement indicating the weight of the doré bar, the percentage of gold and silver in the bar, and from these two, a calculated amount of pure gold and silver. Miners will then either sell this pure gold and silver for cash, or request a loco swap. The doré bar then becomes the property of the refiner.

The doré bar first goes through a chlorine refining process, also known as the Miller process – originally developed at the Sydney Mint by Francis Bowyer Miller (see Australian Dictionary of Biography). It involves bubbling chlorine gas through the molten doré metal. Silver (and most other metals) react with the chlorine to form silver chloride as a slag on top. This process produces gold to a purity of 99.5%, which is usually cast directly into odd weight 400oz bars used in the wholesale markets.

The key output of the chlorine refining process is silver chloride, which enters a silver leaching process to remove the base metals. The silver chloride is then reduced to metallic silver and is then refined by electrolysis.

If there is demand in the market for higher purity gold, then the 99.5% pure gold from the chlorine refining process is cast into anodes to be used in the electrolytic refining process, also known as the Wohlwill process. The anodes are placed into a bath of hydrochloric acid and an electric current is passed through it, which causes the gold to dissolve and then deposit on a cathode at a purity of 99.99%.

The resulting cathodes are melted, granulated and the granules are then used to measure out exact weights of gold for casting into bar sizes from kilo (32.15 ounces) down to half ounce.

Silver Refining

The composition of silver doré bars The Perth Mint processes are composed of around 90% silver and 10% gold. As with gold doré, the silver doré is weighed, melted, assayed and outturned.

The electrolytic silver refining process is similar to gold, except that the silver anodes are dissolved in a bath of nitric acid. The resulting cathodes are 99.9% pure silver. As with small gold bar production, these cathodes are melted, granulated and cast into retail sized bars (most common being 100oz or kilo).

Gold and silver refining process

The diagram gives an overview of the key processes involved in the refining of gold and silver. Please note that this is highly simplified and does not detail the many sub-processes involved within each key process, the chemical inputs involved in each process, as well how the waste outputs from each process are handled.



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Monthly Sales - July 2013

Topics [ gold minted bars Monthly Sales gold coins silver coins ]

STATISTICS

Total ounces of gold and silver sold by The Perth Mint in July 2013 as coins and minted bars.

 - Gold (Au): 56,488.25

 - Silver (Ag): 697,247.39



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