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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Gold Price Predictors Raise The Bar

Earlier this year Bron Suchecki suggested the LBMA’s Precious Metals Forecast Survey was an effective gauge for anyone pondering the likely direction of precious metal prices. After analysing annual predictions since 2007, he said historically, the LBMA forecast has been quite accurate.”

Every year, contributors are asked to consider the likely trading range of gold, silver, platinum and palladium, and predict an average price for each metal during the coming year.

The LBMA certainly makes sure that the annual Survey reflects some of the best thinking available. Before being accepted onto the panel, analysts are judged on “a combination of relevant expertise, the analytical and forecasting ability of the individual concerned, as well as the reputation and standing of the institution they represent.”

Now the LBMA has published a league table revealing which of these individuals have been the most successful over the years.

“This is the precious metal market’s equivalent of the English football Premiership where three clubs, Arsenal, Manchester City and Chelsea are currently vying for top spot,” it said. (In fact there are four - Liverpool has made a late dash up the ladder).

As soccer players focus on silverware in the form of the Premier League trophy, contributors to the LBMA survey can win gold. Four 1oz gold bars are awarded each year to those forecasters whose predicted average comes closest to actual average price for gold, silver, platinum and palladium.

Ross Norman (Sharps Pixley), Philip Klapwijk (Precious Metals Insights) and Rene Hochreiter (Allan Hochreiter) are the form players right now with an impressive five 1oz gold bars each. Each one has raised the bar, so to speak, when it comes to precious metal price forecasting! It will be interesting to see how they go in 2014.

There’s plenty more talent coming through the ranks, however. For more insights into the best LBMA Survey’s best performers, click An Historical Review of the LBMA’s Precious Metals Forecast Survey.



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What’s Happening With Gold?

Topics [ buy silver bullion online buy gold bullion online ]

RESEARCH AND ANALYSIS

Bron Suchecki, our Manager Analysis and Strategy, makes another appearance on the popular Korelin Economics Report. Don’t miss Bron’s valuable insights and analysis of what’s happening in the gold market right now.

Listen here.



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Perth Mint Publishes Mintage And Sales Data For 2013 Bullion Coin Program

Topics [ buy silver bullion online buy gold bullion online ]

BULLION BARS AND COINS

We’re pleased to announce that we have updated our mintage and sales figures for the Australian Lunar, Kookaburra and Koala gold and silver bullion coin series.

The updated information includes Declared Mintages for all 2013-dated bullion coins which have now ceased production.

As defined in the Glossary of Terms contained within our Mintage Policy, a Declared Mintage is the final production figure for a coin that has been closed-off before its Maximum Mintage is reached; or the final production figure for a Mint-to-Order coin or an Unlimited Mintage coin.”

To access the latest data please visit Bullion Mintages and click the series in which you are interested to download the relevant pdf document.



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How ETFs Haven't Altered The Dynamics Of Gold

RESEARCH AND ANALYSIS

This Institutional Investor article How ETFs Alter the Dynamics of Gold is typical of mainstream financial market commentary on gold ETFs. The idea is that gold ETFs were a “game changer for the gold industry”, making  it easier for investors to buy gold and having a positive impact on the gold price. It is intuitive and fits in with mainstream narratives around ETFs in general, which have become a significant feature of financial markets, and no doubt promoted by the World Gold Council (WGC), who sponsored the major gold ETFs including GLD.

The reality, however, is a bit more complex. Let’s take the WGC’s own figures from 2004 (when GLD first started trading) to 2012 (ignoring 2013 when gold ETFs divested 880t), a time period heavily favouring the ETF game changer narrative. During that nine year period, 35,034 tonnes was supplied to the market in the form of newly mined gold and scrap. The chart below shows where that gold went (net nine year demand; miners = mine hedge book reductions).

The dominance of jewellery is probably of no surprise, but I doubt many would be aware that physical bar and coin investment consumed 2.7 times more gold than ETFs. The WGC figures are also skewed against the bar and coin investment category given that the WGC includes Asian/Indian 24ct and low premium jewellery as jewellery when one could argue that sort of buying is more of an investment purchase rather than for adornment purposes like Western jewellery buyers.

If we re classify only 50% of India and China consumer jewellery as bar/coin investment (completely ignoring all other Asian countries), then bar/coin investment style investment then accounts for over 11,400 tonnes of physical gold compared to 2,600 tonnes of ETF investment.

A counter argument to the above might be that price is formed at the margin, so it is not necessarily the total size of the categories that matters, but which of those at the margin tips the supply/demand balance. Certainly this was one of the reasons the WGC shifted its budget from jewellery to ETFs as it saw investment demand as the swing factor in the gold market. If gold ETFs have been behind gold price movements, we should expect to see some correlation between their flows and the gold price, that is, increasing inflows as the price rises and outflow as the price falls.

The table below is a simple correlation of the WGC’s quarterly figures for the period 2004 to 2013 (including the year ETFs showed outflows while the gold price decline, again favouring the dominant narrative) against the average quarterly gold price.

This shows that ETF demand is not correlated to the gold price, with a slight skew to the negative. Physical bar and coin (and central bank activity) however has a very high correlation to the gold price. So if you wanted to forecast the gold price, correctly estimating these two demand figures will give you a far better result than looking at ETF demand. The chart below demonstrates this more clearly.

Here you can see that ETF demand was relatively constant during the gold bull market, averaging 50 tonnes a quarter. In the early phase of the bull market it was similar to coin and bar investment which was running at 100 tonnes a quarter. However the two diverge in 2008 at the time of the global financial crisis, where you can see physical coin and bar buyers moving up to around 300 tonnes a quarter while ETF demand showed little change. It is clear that physical coin and bar investment was more of a driver of the gold market post-2008 than ETFs, with ETFs only having a major impact in 2013.

So why do mainstream financial commentators focus on gold ETFs? Because they are highly visible, giving daily trading volume and holding figures. The less visible/frequent physical coin and bar market figures can’t compete for the attention of journalists needing to write something every day. That’s OK – as Ben Hunt says, it is “the business model imperative of financial media” – but just don’t make an investment decision based on it.



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Buyer Beware Counterfeit Coins

BULLION BARS AND COINS

The availability of counterfeit and ‘look-a-like’ Perth Mint coins on popular auction sites is a familiar topic of discussion on the internet.

I would like to reiterate our position on this issue and emphasize that this really is a situation of buyer beware.

The Perth Mint, like other well-known brand manufacturers, is powerless to stop imitations being manufactured in other countries, like China.

If and when replica coins come to our attention, we take action to have them removed from websites offering them for sale by contacting the operators of such sites.

Importantly, we report instances to the Australian Federal Police.

Generally, counterfeit goods are produced cheaply to be sold cheaply. Should you come across what might appear to be Australian bullion being offered at cheap prices on the internet, please treat them with extreme skepticism.

We offer you simple but crucial advice.  To be certain that you are buying genuine gold and silver, only ever by direct from The Perth Mint or a reputable precious metal dealer.



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Monthly Sales – February 2014

Topics [ buy gold online gold coins minted bars bullion coins silver coins ]

STATISTICS

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

 - Gold (Au): 47,003

 - Silver (Ag): 392,088



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