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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Infographic - The Most Sought After Metal On Earth

RESEARCH & ANALYSIS

Visual Capitalist says: This infographic introduces the yellow metal and tells the story of how it became the most sought after metal on earth.

Gold was one of the first metals discovered by ancient peoples and eventually gold grew to symbolize wealth, royalty and immortality. Gold began to be used as money by many cultures, but the Romans were the first to use it extensively. The rarity, malleability, durability, ease to identify, and intrinsic value of gold made it perfect for money.

While many civilizations throughout the world used gold for money, eventually its role would change with the coming of the gold standard system. In modern history, gold was shaped by events such as Roosevelt’s confiscation order in 1933 and President Nixon ending the direct convertibility of gold to US dollars in 1971. Although gold is no longer the basis of the modern monetary system, there is more gold demand today than ever before.

Full Infographic

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How Are Spot Prices Determined?

Topics [ gold prices buy silver bullion online silver prices buy gold bullion online ]

EDUCATION

There are two key markets in which the prices of gold and silver are determined.

1. Over-the-Counter (OTC)

The OTC market consists of traders dealing with other traders on a one-on-one basis. It operates much like the internet – it is just a network of traders independently dealing with each other 24 hours a day. OTC is generally meant to refer to professional/corporate entities trading 400oz gold bars (and 1000oz silver bars), usually for settlement in London. However, when you buy a coin from a bullion dealer, you are also doing an OTC deal.

OTC trading is done on the telephone or via a dealer's proprietary trading platform software. Just like your transaction with a coin dealer, the amount dealt and the spot price agreed is not public.

To facilitate price discovery in what is an otherwise opaque market, precious metal dealers often use a service like Reuters or Bloomberg as an indicator of where the spot price is. This spot price is updated by the bullion desks of the big banks and is, in effect, a bulletin board or forum where these banks can publish their prices. However, unlike a stock market, it is not a commitment to deal at those prices (but generally one can).

It is therefore hard to "pin down" the OTC spot price, compared to a public exchange.

2. Futures Exchanges

Futures markets are public, regulated exchanges where the price for delivery of gold or silver at various dates into the future is traded. The largest and most influential market is the US COMEX market.

Often the current (or nearest) future prices quoted as a spot price of physical gold. Technically this is not correct as it is a price for gold or silver to settle in the future whereas the "spot price" is the price for immediate settlement. However, in countries with futures exchanges dealers often base their price for immediate delivery of gold or silver off their local futures market, so from a retail customer's point of view a futures prices is effectively the spot price.

It is important to note that futures and spot prices are related to each other and as such are kept in alignment by arbitrage traders who look at the relative costs of borrowing cash and gold (and other factors) and will sell futures and buy OTC spot (or vice versa) if they see too much divergence between the prices.

There has been some debate as to whether US futures markets or the London OTC spot markets drive the price. This analysis concludes that it is not fixed and changes over time, even though the London OTC market is much larger than COMEX in terms of ounces traded.

A Bullion Dealer's Spot Price

So how do bullion dealers selling to customers set their spot price? They do so by considering the following factors:

The spot/futures price may change in the time between committing to a price with their customer and executing a deal with their OTC counterparty or futures market broker.

OTC and futures markets are wholesale markets (trading in "lots" of 1,000oz and 100oz of gold, respectively) whereas a dealer's retail customers will be buying in much smaller amounts. This means it may take some time before they have accumulated enough ounces to execute a deal, during which the OTC/futures price will change.

The dealer may not be quoted the Reuters or Bloomberg screen price when trying to lock in a price in the OTC market, especially when the market is moving quickly and bullion banks are not updating their prices into those information services quickly enough.

For futures trading, the dealer will be charged brokerage fees. For both futures and OTC trading there is also general costs of employing dealers and settling trades.

The way bullion dealers manage the above factors is to add a margin (or buffer) to the spot or futures price they see quoted. How much they add and how often they will change their spot prices depends on how volatile the wholesale price is and how much buying or selling their clients are doing. This changes dynamically during the day and will also vary between each bullion dealer. Note that this spot price margin is in addition to any fabrication premium.

The result is that you will find each bullion dealer quoting different spot prices. This can be confusing to first time investors who are used to, for example, a single price for a company's stock on a single exchange. It often leads to questions about whether they are being quoted a "fair" price.

The only way to know if you are getting a fair price is to do what bullion dealers themselves have to do, which is to shop around and see who is offering the best price at that time and take it. In doing so, you become part of the huge, opaque precious metal market “network” of over-the-counter traders. Good luck!



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Strong Physical Demand Outweighed By Heavy Liquidation of Gold Funds In 2013

Topics [ gold investing gold bull market gold market gold bear market ]

RESEARCH AND ANALYSIS

Industry body The World Gold Council has released it latest report - ‘Gold Demand Trends Full Year 2013’.

“2013 proved to be the year of the consumer, with gold jewellery demand close to pre-crisis levels and investment in small bars and coins hitting a record high. The result was annual gold demand of 3,756.1 tonnes, valued at US$170bn. However, outweighing the impressive consumer demand were the effects of ETF outflows and lower central bank buying, resulting in 2013 demand 15% below the strong volumes recorded in 2012.”

 

Download pdf to read the report in full.

 



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Video - 10 Kilo Year Of The Horse Silver Bullion Coin

Topics [ Year of the Horse Australian Lunar buy silver bullion online silver coins buy gold bullion online ]

BULLION BARS AND COINS

See this massive 10 Kilo silver bullion coin produced at The Perth Mint.

This is the largest release from our Australian Lunar Silver Bullion Coin Series. Made from 10 kilos of 99.9% pure silver, the special release has a maximum mintage of just 200.



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Tribute Coin Proves A Boon For Bullion Sales

Topics [ buy gold online Australian Kangaroo buy silver bullion online invest in gold ]

BULLION BARS AND COINS

Sales of Perth Mint gold bullion products climbed for the third month in a row in January, backed by the launch of our 2014 Australian Kangaroo 1oz Gold Bullion Tribute Coin.

In less than six weeks, almost 30,000 of these special coins have been sold from a maximum mintage of 65,000.

 

The Tribute Coin replicates the classic Stuart Devlin ‘Red Kangaroo’ design first seen 25 years ago in 1989 on Australia’s inaugural gold bullion coin program.

Many will also recognise it as the reverse of our massive 1 Tonne Gold Coin, which recently returned to Perth from a hugely successful tour of Europe where it caused a sensation at the World Money Fair in Berlin.

I can report that in many years of attending WMF, never have I witnessed so many visitors on The Perth Mint stand during the event! 

 

Overall, sales of Australian gold bullion coins and minted bars rose 10 percent to 64,818oz in January 2014 from 58,943.61oz sold in December 2013. Sales were down slightly on the 65,683.71oz achieved one year ago.

Registered buyers in Australia and Asia can acquire the Australian Kangaroo 1oz Gold Bullion Tribute Coin, as well as other Australian gold bullion coins starting as small as 1/20oz at www.perthmintbullion.com.

The Perth Mint has a worldwide network of authorised bullion distributors for buyers in most other regions.



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Monthly Sales – January 2014

Topics [ buy gold online Monthly Sales gold coins minted bars silver coins invest in silver ]

STATISTICS

Total ounces of gold and silver sold by The Perth Mint in January 2014 as coins and minted bars.

 - Gold (Au): 64,818

 - Silver (Ag): 912,388



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