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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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The dramatic rise of gold since 1971

Topics [ gold prices ]

With an annual average price growth of almost 9% since the start of the 1970s it is little wonder that astute investors continue to hold the precious metal in their portfolios.

In this blog we look at what has moved the gold price since the pivotal year of 1971.

Prior to this date, the price of gold had not moved substantially for hundreds of years.

This can be attributed to the gold standard, an international monetary system subscribed to by trading nations during the 19th and much of the 20th centuries.

Essentially, it required each currency to be redeemable for gold and for the price of gold to be fixed. In 1900 the gold price was set at USD 20.67 per ounce. In 1933 the price was amended to USD 35.00.

But in 1971, amid stagflation (economic stagnation accompanied by inflation), use of gold to back the US dollar was abandoned in favour of ‘fiat’ or government-issued currency. Most major countries adopted a floating exchange rate system – and the price of gold was henceforth determined by market forces.


In 1976 the price of gold shot up to USD 120 and by 1980 it was at a record high of USD 850 per ounce. The 1980 rally was driven by a raft of financial and geopolitical crises – the Iranian revolution, the oil price spike and the Soviet invasion of Afghanistan.

In resorting to gold, investors demonstrated their faith in its historical role as a safe haven in difficult and dangerous times.

As the decade progressed, Western countries gradually reined in inflation and unemployment. Gold fell out of favour somewhat as the New York Stock Exchange index nearly quadrupled, going from just over 500 to almost 2,000.

Amid strong economic growth in the 1990s, interest in gold declined further and at less than USD 300 an ounce at the beginning of the new century, the investment case for gold appeared weak.

Astonishingly, though, the metal was about to embark on its most powerful bull run in history. Over the ensuing decade the price was destined to increase eightfold, peaking at just over USD 1,900 an ounce in 2011.

The backdrop to this incredible rise was one of international emergencies and financial turmoil. Key events of the period include the 9/11 terrorist attacks, the invasion of Iraq, and the granddaddy of them all from gold’s perspective, the financial meltdown of 2007, the ensuing global financial crisis and efforts to contain its worst impacts through quantitative easing.

In reaction, seasoned investors sought gold as a hedge instrument – a position with the potential to offset losses in other assets within an investment portfolio.

At the same time, central banks began a buying spree, with China for example raising its gold reserves from just. 600 tonnes in 2002 to 1,054 tonnes between by 2009. They have continued to buy in the decade since, with official gold holdings now approaching 2,000 tonnes.

It wasn’t just China that was buying, with central banks in a number of other countries including Russia, India, Kazakhstan, Korea, Mexico, Poland, the Philippines and Thailand also adding to their reserves, with low to negative interest rates and successive rounds of quantitative easing across the developed world encouraged predominantly emerging market central banks to diversify their foreign exchange reserves.


And with the hype around the rising gold price, a large number of speculators also jumped on the precious metal bandwagon.

Where are we today?

From its peak, gold declined to around USD 1,000 at the end of 2015.

From April 2013 until just recently, there has been a lack of significant volatility in the gold price, which has traded in a band of between USD 1,000 - 1,450 per ounce. Even at this level, however, gold is at historically high levels.

In 2016 the gold price began trending higher again (and in Australian dollar terms has continued to post new highs since June 2019).

Some commentators see this as the beginning of a new bull market for gold. The factors they use for this argument include:

• Gold has re-established its reputation as a safe haven after doubters appeared to question this in recent years.

• Interest rates remain low and appear to be going lower still, encouraging investors to chase returns in shares and property which may be reaching bubble territory in some parts of the developed world.

• Geopolitical and trade tensions remain high – Brexit, the Iranian nuclear deal and US-China trade talks are among key issues contributing to current disquiet.

• Central banks worldwide continue to signal their concern by buying record levels of gold.

Without doubt, this is a powerful mix of factors with the potential to continue gold’s exhilarating ride since 1971.



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Big coin in the Big Apple

Topics [ One Tonne Gold Coin Australian Kangaroo ]

Proudly representing The Perth Mint and the Australian gold industry, our one-of-a-kind Australian Kangaroo One Tonne Gold Coin has taken New York by storm.

In our 120th year of taking Australian gold to the world, our iconic coin was on display outside the New York Stock Exchange, where thousands of locals and visitors enjoyed the unique opportunity to admire this masterpiece of minting.

Recognised by Guinness World Records as the largest coin ever created, the 99.99% pure gold colossus measures 80cm wide and 13cm deep. Tipping the scales at 1,000kg, it has an intrinsic value of more than AUD 60 million at current gold prices.

After its successful sojourn in the USA, the One Tonne Gold Coin will once again be on display at our exhibition in Perth soon.



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How much gold should you have in your investment portfolio?

Investors seeking a balanced portfolio often include gold because its price tends to move in the opposite direction to risk assets such as equities and high-yield bonds.

One of the most common questions such investors ask is “how much gold should I own in my portfolio?”

It’s one that’s getting renewed attention, not just because gold recently pushed above USD 1,400 per ounce, but also due to the plunge in global bond yields and the likelihood that the US Federal Reserve will soon begin easing monetary policy.

Many astute investors typically allocate 5-10% of a diversified portfolio to gold. Bullion should always form part of a portfolio, with a holding of at least 10%, according to Dr Mark Mobius, a high profile investor interviewed recently by Bloomberg.

However, there are some strategies, including the 'Permanent Portfolio' investment strategy, which typically recommends a 25% allocation to the yellow metal, alongside similar weights in equities, bonds and cash.

There are many reasons investors allocate to gold, including the fact that it:

 • Has delivered strong long-term returns in its own right.

 • Typically helps diversify a portfolio, owing to its low to negative correlation with financial assets.

 • Is a highly liquid asset with zero credit risk.

 • Has a strong record of protecting wealth in periods of market stress and high inflation.

It is also worth noting the supply of gold is finite and it can’t be created at will. Central banks can print money, but they cannot print gold. This is another attractive feature driving demand for gold and its price, given ongoing investor concern about rising debt levels and monetary debasement.

All these factors reinforce the case for gold within a long-term portfolio. Whether that number is 5%, 10% or 25% is up to the individual. Whatever allocation they choose, gold is an asset that should be on investors’ radars.



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SOLD OUT Latest bullion coin sell outs at The Perth Mint

Topics [ Sold Out ]

The following bullion coin releases are now sold out at The Perth Mint.

Australian Swan
2019 1oz Silver Bullion Coin
Maximum mintage: 25,000
Australian Lunar
Year of the Pig 10 Kilo Silver Bullion Coin
Maximum mintage: 100
 


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Perth Mint upsizes Mother and Baby Crocodile coin

Topics [ silver bullion coins Mother and Baby ]

For those with a keen eye on where the price of silver is headed, this new release offers investors the chance to acquire an extra thick ‘piedfort’ coin featuring just the second design in our Mother and Baby series.

Struck from 10oz of 99.99% pure silver, the substantial bullion release has a diameter of 65.6mm with a thickness of 13.5mm. It portrays a young crocodile riding on the head of its partly submerged mother.

Regarded as having the most powerful bite in the animal kingdom, saltwater or estuarine crocodiles have a ferocious reputation and are exceptionally dangerous. They are also extremely protective of their young, which they nurture for many months after hatching. Even so, it is thought that no more than 1% of baby crocodiles survive to maturity in the wild.

This exceptionally rare coin has a mintage of just 2,500. To snap one up before stocks are devoured, Australian clients can order online at perthmintbullion.com, contact customer services on 1300 201 112, or visit us in person.

Overseas customers should check with local dealers for availability in their region.



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Gold set to shine in digital economy

Topics [ GoldPass® ]

The meteoric rise in the price of Bitcoin at the end of 2017 resulted in cryptocurrencies being touted as the smart new way to protect one’s hard-earned wealth.

Fans of crypto argue that virtual currencies don’t rely on governments for their value. The attraction of Bitcoin, they say, is that it is easily transferable, liquid and private, with relatively limited supply.

Some commentators have gone as far as concluding that these digital assets are replacing gold as a hedge against inflation and as insurance in the event of disaster.

In our opinion, it’s simply too early make such bold predictions. Cryptocurrencies only arrived in 2009 and many questions remain about their level of acceptance, long term price performance and how they may be regulated.

By contrast, gold has been trusted as a safe haven investment and store of wealth for thousands of years. According to the well-known anecdote, in Roman times an ounce of gold could buy a Senator’s toga and belt. At USD 1,400, an ounce today probably buys a fine suit with enough change to cover a silk tie!

Not just used by individuals for investment, gold is still being acquired by central banks worldwide – in fact purchases in this sector reached a 50 year high in 2018. It remains popular for jewellery, particularly in the Asian powerhouses of China and India, as well as being used in the growing number of electronic devices.

Even so, crypto fans choose to make a great deal about Bitcoin’s transferability and potential as a means of payment for goods and services. But similar digital encryption technology is enabling gold to move in this direction, too.

The Perth Mint is an innovator in this area and GoldPass®, its new smartphone app, not only allows users to buy and sell gold instantaneously at any time of the day or night, but also facilitates peer-to-peer transfers – all in a highly secure environment.

As it stands, GoldPass® is ideal for anyone comfortable with digital technology who wants to invest in gold. Their holdings are doubly protected through the use of digital encryption and by the fact that their metal is with a government-owned institution with a reputation of 120 years standing - a huge comfort factor completely absent in the crypto sector.

In fact all GoldPass® digital certificates are 100 percent backed by physical Perth Mint gold stored in its central bank grade vaults, with the weight and purity of every ounce guaranteed by the Government of Western Australia.

Thanks to the peer-to-peer capability of GoldPass®, it’s also the ideal vehicle to ‘gift’ gold to a family member or friend. The technology opens up huge possibilities going forward that would see groups of users effectively ‘pay’ one another in gold, an idea that could have serious applications in retailing.

While these concepts are still in their infancy, the future of digital gold appears bright, especially when it’s being driven by an organisation with a long-established record of proven competency, transparency and integrity.



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