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Measuring global gold market liquidity

Topics [ gold investing ]

Liquidity measures the dollar value of turnover in a given asset class. It is an important consideration for investors seeking exposure to precious metals – and indeed any asset class.

All other things being equal, an asset that has high liquidity is better than one with lower liquidity, for two related reasons. 

The first is that an asset with higher liquidity is easier to buy and sell than one with low liquidity. 

Secondly, an asset with high liquidity may be traded with a minimal impact on the price, relative to an asset with low liquidity.

Many people are surprised to learn that physical gold is one of the most liquid asset classes in the market, with average daily turnover in 2019 of more than USD 145 billion. 

This is demonstrated in the chart below, which plots the dollar value of turnover in gold alongside a range of other assets. Note that the asset classes are colour coded depending on whether they are equity (red), fixed income (black) or currency (green) markets.

Daily liquidity (USD billion) in 2019 – Various asset classes

Source: The Perth Mint, World Gold Council

With daily liquidity matching the S&P 500, the world’s premier equity market, gold has a much higher liquidity than many major currency pairs and indeed many bond markets.

Where is gold traded? 

Liquidity in the gold market stems from two primary sources. Over the counter (OTC) bullion trading, as well as trading that takes place on futures markets, accounts for more than 85% of gold market turnover. 

The remainder comes from a range of other sources, including turnover on the Shanghai Gold Exchange, the London Metal Exchange and the global gold ETF market, which includes products like Perth Mint Gold (ASX:PMGOLD).

The table below provides a detailed breakdown of average daily turnover from these sources across the 2019 financial year. 

Source: The Perth Mint, World Gold Council

Takeaway for investors

A key benefit of gold, as one of the most liquid asset classes in the world, is that it gives investors peace of mind knowing they can sell when they need (or want) to sell.  

Provided an investor has bought gold from a reputable counterparty like The Perth Mint, and is storing it with that counterparty, then they should find it easy to liquidate their holdings at any point in the future. 


Trading volumes, World Gold Council. Accessed 27/10/20

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The gold standard in mental health

While keeping some distance from each other to maintain our physical health in 2020, we have all appreciated how important it is to maintain positive social connections and good mental health. 

Given many people spend a significant proportion of their lives at work, it’s important that organisations encourage their employees to reach out for help when they need it while fostering conversation and inclusion within the workplace.

Below we outline what The Perth Mint, as a Gold Mental Health First Aid Skilled workplace, does to support its staff, and hence their families and friends in the broader community.

By the numbers

In any given year, 20% of Australians will have experienced a mental health condition. A further one sixth of the population will suffer with symptoms of undiagnosed mental illness. Yet 65% of these people don’t seek access to professional support. 

In 2017, 3,128 Australians took their own lives. It is estimated that for every person who dies by suicide, another 20 people will attempt to take their own lives. 

Mental health conditions can manifest in a variety of ways at work including increased absenteeism, withdrawal, personality changes, decreased performance, conflicts with co-workers, difficulties concentrating and memory problems. 

Registered psychologist and Perth Mint Group Manager Organisational Development Kristen Potter says there has been a stigma around mental health illnesses in the workplace which may impact those suffering. 

“Stigma, fear of losing their job and an unsupportive workplace can all contribute to a reluctance to reach out for help,” Kristen said. 

“A mentally healthy workplace aims to foster an environment where people at all levels have a common goal and a commitment to positive mental health. Work demands are realistic in a way that balances the needs of the employees and the organisation. Everyone feels comfortable to speak openly about mental health and mental health conditions, without fear or stigma, creating a culture of respect and inclusivity.”

Fostering a mentally healthy workplace

Various elements such as job design, team and group factors, and organisational policy contribute to mental health and wellbeing outcomes in employees. Jobs which provide a perceived level of control and autonomy, meaningful work and variety are associated with better mental health outcomes, according to many studies. 

“Team factors provide access to emotional and practical assistance and fulfil our fundamental need we have to belong,” Kristen said. 

“Factors such as changes within the workplace, the level of support available, systems in place for recognising and rewarding good work, the fairness of rules and social norms, the psychological safety culture and physical work environment can all contribute.”

It is also important to look outside the workplace at pressures from home such as marital distress, abuse and violence, caring responsibilities, loss of a loved one and financial stress.

In addition, individual variants are unique and complex such as a family history of mental health problems, personality traits, coping styles, responses to stressful situations and various lifestyle factors. 

Golden initiatives 

As the global community has become more aware of the need to recognise mental health conditions in the same capacity as physical wellbeing and safety, initiatives have been developed to assist in mental health first aid.   

This is defined as the help provided to a person who is developing a mental health problem, experiencing a worsening of a mental health problem, or in a mental health crisis. The first aid is given until appropriate professional help is received, or the crisis resolves.

Mental Health First Aid Australia, a national not-for-profit organisation focused on mental health training and research, has developed a range of courses that teach mental health first aid strategies to members of the public.

In 2019 The Perth Mint was named a Gold Mental Health First Aid Skilled workplace by Mental Health First Aid Australia in acknowledgement of our achievements in developing mental health first aid skills.

“The recognition program celebrates organisations across Australia who not only invest in developing mental health first aid skills in their people, but also show a strong commitment to embedding the program into their organisation’s culture,” Kristen said.

“This can be implemented through actions like senior leadership support, relevant policies, supporting Mental Health First Aid Officers and continuous education and development of resources.”

To achieve a gold standard, workplaces must have trained at least 10% of staff in Mental Health First Aid and achieved completion of at least eight initiatives such as those outlined above.

The Perth Mint’s approach to a mentally healthy workplace is through an integrated framework across three key areas of promotion, protection and support.

“Promotion focuses on improving understanding and promoting mental health. Protection is about fostering a stigma-free culture and support looks at how to help the individuals in a way that works for them,” Kristen said.


Acknowledging the importance of training across all levels of the organisation, The Perth Mint delivers an annual Engaging Leaders Program from Mental Health First Aid Australia which Kristen believes has a positive impact within the workplace.

Following the delivery of this program in 2019, 100% of participants stated that they felt confident to implement the learnings into the workplace.

“My favourite piece of feedback from a manager was: Remember the old days? We would've never done anything like this. We are changing, in a good way...’”, Kristen said.

In 2020 we are keeping the conversation going by creating conversation corners at our East Perth and Refinery locations with a new R U OK? branded bench in recognition of the work the R U OK? organisation in Australia does to encourage meaningful conversations around mental health. 

These are designed to create an informal, inviting and friendly space and act as a reminder of the importance of taking time every day to look out for the people around us. 

Next steps

While financial return on investment has not been measured, the impacts of such initiatives over the past few years have been felt by the business in other ways.

“Qualitatively we have started to see a shift in the mindsets and conversations around the business. The topic of mental health is much more prominent than it was a few years back,” Kristen said.
“We regularly celebrate events such as R U OK? Day, our CEO includes a repeated public statement demonstrating our commitment to mental health in his safety promise, our Mental Health First Aid Officers are being utilised and during COVID employee wellbeing was at the forefront of the conversation.” 

Dedicated to continuous improvement, The Perth Mint’s plans moving forward involve ongoing development of leadership skills and building the range of wellness initiatives available which include an Employee Assistance Program, resilience workshops, mindfulness workshops, on-site yoga and general wellness seminars. 

Learn more about careers at The Perth Mint and its commitment to people and culture here.

What is a mentally healthy workplace, Heads Up

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Understanding gold purity

Dating back to the beginning of time, gold’s value has always been inextricably entwined with its purity. 

While the system of measuring gold’s purity was determined thousands of years ago, long before it became a monetary asset, these units continue to dictate the metal’s value today. 

It therefore makes sense that understanding how and why gold is valued remains just as important to the modern investor as it did to the ancient trader.

Below we explore what purity means - and why it matters.

Ancient origins

Gold’s durability, density and glow made it a natural choice as a store of wealth long before it was used as money.

Before the advent of coins, which were an ingenious innovation around 700BCE (a good 2,000 years after gold was first launched on its monetary career), every transaction involved the somewhat tedious task of testing for purity and putting the gold on a scale to determine its exact weight. 

So, from the very beginning, a widely accepted method for gauging the purity of gold was essential. It therefore acquired its own measuring system for these purposes, with versions now used on other precious metals and gemstones. 

Did you say carob?

You may be familiar with the word carat as a unit of measurement in relation to diamonds and other precious gems. However we also define the purity of a piece of gold in terms of its carats. 

Carat - deriving from Arabic qīrāṭ, meaning ‘bean pod’, keration in Greek and carato in Italian – was originally a unit of measurement rather than purity. 

Carats are the seeds of the leguminous carob tree, the average pod of which weighs one-fifth of a gram. Hence these small seeds from the flowering plant were the conventional standard weight for eons - and remain so for gold. 

One carat (spelt karat in the US) is equal to 1/24th part of pure gold in an alloy. 

In other words:

• 24-carat gold is 99.99% pure, or 24/24 carats. 
• 22-carat gold, expressed in a percentage, is 91.7% pure. 
• 18-carat is made of 18 parts gold and six parts of some other metal, such as copper or silver, meaning it is more durable and resistant to scratches than pure gold.

24-carat gold – or 99.99% pure gold – is the highest and purest grade of gold. It is soft, malleable and highly resistant to rust and tarnish. Therefore, its most common usage is in gold bars and coins for investment and wealth storage. 

22-carat gold is typically less expensive than 24-carat gold. It is more durable than its pure counterpart, making it ideal historically for the production of gold sovereigns. It is also found in plain jewellery, however 18-carat (75% pure gold) is also suitable for fine jewellery and of course 14-carat and below are typical gold nominations for more common – and less expensive – adornments. 

As per all those thousands of years ago, the more carats and therefore the purer the gold, the more valuable. 

Troy ounces

Eventually the carat was replaced as the standard measurement by the grain. The troy ounce, which comes from the French town of Troy where the measure was first put into use, weighs 480 grains. 

12 troy ounces equal one pound, which is the same as one sixteen-ounce pound avoirdupois (avoirdupois is the conventional measurement system of weights which uses pounds and ounces). 

Therefore troy ounces are heavier than the ounces we are used to employing. The modern convention is to express the weight of gold in grains but the price in troy ounces. 

Purity you can trust

Armed with the above knowledge, you can see why it’s important to understand the purity – and therefore the quality – of your assets, especially when building your savings.

As a certified gold refiner and weight master with accreditations from all five of the world’s major gold exchanges, Perth Mint customers can have the utmost confidence in the stated weight, purity and integrity of our products.

With a reputation built across more than 120 years as an industry leader, we are the supplier of choice for thousands of investors around the world who benefit from the trusted purity of our suite of products. 

If you’re ready to save in gold, we offer easy access to the precious metal in a variety of forms.

An extensive range of physical gold bullion gold bars and coins are available for purchase from our website, with the weight and purity of each guaranteed. 

These span from 1oz to 1,000oz (1 kilo) gold bars and coins, all 99.99% pure. 

Our Depository Online (DOL) service provides online access 24/7 to live gold prices for easy trade and several types of storage options. DOL can easily adapt to a savings plan with the option of scheduling an investment of as little as AUD 50 each month.

For those just starting out on their wealth-creation journey, our GoldPass app puts your gold savings in the palm of your hand. With instant access, it gives you the ability to buy digital gold at the touch of a button and with no minimum investment.

If you’d rather admire gold in the form of jewellery, our luxury boutique stocks exquisite 18-carat gold pieces perfectly complemented by the rarest of precious gems.


The power of gold: The history of an obsession
, Bernstein, Peter L. 

On the origin of the carat as the unit of weight for gemstones, Zhengzhang, T. Chin. J. of Geochem.10, 288–293 (1991). 

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Gold corrects as markets look to US election

Topics [ market analysis Market update ]

The gold price fell by more than 3.50% in US dollar (USD) terms during September, undergoing an overdue correction after the explosive gains seen earlier in the year. Long term, the outlook for precious metals remains positive with a range of macro-economic and monetary factors driving investors toward precious metals.

Executive summary
The gold price fell by more than 3.50% in USD terms during September, finishing the month at USD 1,886.90/oz.

In Australian dollar (AUD) terms the gold price was basically flat, finishing the month trading at AUD 2,654.62/oz. 

The decline in the AUD, which fell by 3.35% vs the USD and finished the month at USD 0.7108, mitigated losses for local investors.

Silver fell by more than 15% in USD terms, pushing the gold to silver ratio to 79.

Rising real yields and an increase in the USD index helped drive the correction in precious metals.

ETF inflows continued, but at a much slower pace, whilst managed money investors reduced their long exposure in the second half of the month.

The outlook for financial markets is likely to remain uncertain in the lead up to the US Presidential Election in early November.

Full monthly review – September 2020 

The gold market continued its correction from the all-time highs seen in early August, when the precious metal traded at more than USD 2,050 per troy ounce, to drop by more than 3% during September.

Silver was hit even harder, falling by more than 15% in USD terms to close the month trading just below USD 24.00 per troy ounce. Despite the pullback, silver prices are still almost double what they were in March 2020. The gold to silver ratio finished September at 79.

There were at least three primary contributors to the decline in precious metal prices seen during September.

Rising USD

The USD index increased by more than 2.50% at one stage though it gave up some of this gain to close the month up by 1.9%. This contributed to the pullback in gold, which often struggles in environments where the greenback is rallying. 

Growth in real yields

Whilst bond yields remain negative in real terms across most of the developed world, they did manage to rise during September. The table below highlights the real yields on US Treasuries of various maturities from five years to 30 years as at 31 August and 30 September 2020, as well as the movement across the month. 

Source: US Department of the Treasury

Long term, negative real yields on sovereign debt are likely to remain one of the key factors driving increased strategic asset allocations to gold. Short term, any increases in real yields can act as a headwind, particularly when that increase is driven by declining inflation expectations, which is what transpired during September.  

Loss of momentum

Another factor contributing to the pullback in precious metals was a simple loss of momentum, with gold, and silver to an even stronger degree, unable to maintain the blistering pace of price gains seen this year.

It was inevitable that this would happen eventually, as no market goes up in a straight line. Indeed, it is a healthy part of any bull market to go through corrective periods, with what we believe was an overdue correction in gold explored in more detail below. 

Cracks in other markets appearing 

Precious metals were not the only market to correct during September, with global equities also pulling back. The S&P 500 dropped by more than 7.5% at one point, though pared some of the losses to close the month down by approximately 4%. The ASX 200 in Australia experienced a correction of similar magnitude. 

Market drivers included concerns regarding the stimulus package being debated in Washington, uncertainty surrounding the upcoming US Presidential Election, and growing fears that the spread of COVID-19 is again accelerating in parts of the Northern Hemisphere. 

Gold correction was overdue

For some time now, we have been warning of the potential for a correction in the gold price. The market rallied very strongly from under USD 1,200 per troy ounce in September 2018 to more than USD 2,050 per troy ounce in August 2020, an increase of almost 75%. 

By August 2020, the gold price was trading 26% above its 200-day moving average (200DmA), which was a warning sign that some short-term froth was evident in the market.

To highlight this, consider the chart below, which displays the USD spot price of gold from December 1999 to the end of September 2020 (gold line). It also shows how far the gold price was trading above or below its 200DMA (black line) on any given day over this period.

Source: The Perth Mint, Reuters 

As you can see, there have been several occasions across the past 20 years where the gold price traded at 20% or more above its 200DMA. These have typically been short lived, with the market generally giving back some of these gains in a period of consolidation.   

The table below highlights this clearly, showing the previous periods where gold was trading at more than 20% above its 200DMA, the gold price at the time, and the three-month and three-year returns that followed. 

Source: The Perth Mint, Reuters
*This figure represents the gold correction from 6 August 2020 to 30 September 2020. The three-month return will not be known until 6 November 2020.

The table makes it clear that on every prior occasion that gold was trading at more than 20% above its 200DMA, the price fell in the following three months, resulting in an average pullback of almost 10%. 

Those corrections typically proved to be good times for investors to add to their precious metal holdings. As the table demonstrates, the gold price generally increased in the three years following on from these strong rallies. The only exception of course was what happened after 2011, with gold priced in USD falling into a bear market that carried on until the end of 2015.

Whilst there are no guarantees, the economic, monetary and financial market environment investors face today is vastly more supportive of gold than it was in 2011. 

Given this, there is a reasonable chance that the current pullback we are seeing in gold is similar to those we saw in 2006, 2008 and 2009.  

Investors continue to acquire precious metals

Investors continued to allocate to precious metals in September, albeit at a slower pace than we’ve been accustomed to for most of 2020.

Perth Mint minted gold bar and coin sales totalled just over 62,000 ounces. While this is a long way short of the sales numbers seen in March and April (when we sold 93,775 and 120,504 ounces respectively), it is still more than 50% higher than the average monthly sales reported between mid-2012 and 2019.

Global gold ETF holdings increased by 47.49 tonnes (data to 25 September only), a sharp slowdown compared to the first eight months of the year which saw average inflows of almost 120 tonnes per month. 

This trend has also been experienced in Australia, with Perth Mint Gold (ASX:PMGOLD) holdings increasing by just over 1% in September. It had grown by more than 70% in the eight months to end August. 

In the futures market, managed money longs (those betting the gold price will rise) reduced their exposure in the second half of the month, with positions falling from 166,571 contracts as at 15 September to just 140,320 contracts by September 29. This position changing will have contributed to the decline in the gold price we saw in mid to late September.


A period of heightened volatility in precious metals and other markets would not be unexpected in the weeks ahead, with multiple risk factors at play. 

The first of these is the US Presidential Election, which is due to take place on 3 November 2020. While the polls and betting markets continue to favour Joe Biden and the Democratic Party, much could change in the next four weeks, especially with news in early October that US President Donald Trump and his wife have fallen ill with COVID-19. 

The threat from COVID-19 is obviously not limited to the White House, with the spread of the virus appearing to accelerate recently in parts of Europe and North America. Should the situation continue to deteriorate, not only will global growth figures again be revised down, but policymakers will be under even more pressure to deliver another round of fiscal and monetary stimulus. 

Given this backdrop, we would not be surprised to see continued demand for precious metals from investors wanting to diversify their portfolios, even if gold and silver prices themselves continue to correct or trade sideways in the coming weeks. 

Jordan Eliseo
Manager – Listed Products and Investment Research 
The Perth Mint
6 October 2020

Past performance does not guarantee future results.
The information in this article and the links provided are for general information only and should not be taken as constituting professional advice from The Perth Mint. The Perth Mint is not a financial adviser. You should consider seeking independent financial advice to check how the information in this article relates to your unique circumstances. All data, including prices, quotes, valuations and statistics included have been obtained from sources The Perth Mint deems to be reliable, but we do not guarantee their accuracy or completeness. The Perth Mint is not liable for any loss caused, whether due to negligence or otherwise, arising from the use of, or reliance on, the information provided directly or indirectly, by use of this article. 

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Perth Mint Gold holdings September 2020

Holdings of Perth Mint Gold (ASX:PMGOLD) continued to rise in September 2020, increasing by almost 3,000 ounces. The product ended the month with holdings of 231,005 ounces (7.19 tonnes). 

Monthly flows into PMGOLD can be seen in the chart below, with holdings increasing by more than 70% in the first nine months of 2020. 

Source: The Perth Mint, ASX, Reuters

The growth in the product seen in 2020 continues a strong period of demand for PMGOLD that dates back to September 2018, with total holdings increasing by more than 170% over this two-year period.

PMGOLD holdings finished September 2020 with a value of AUD 614 million, based on a last traded price of 26.59 per unit on the ASX on 30 September 2020. 

To learn more about investing in PMGOLD, simply download our PMGOLD Factsheet

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Demand for Australian Lunar boosts bullion coin sales in September 2020

Topics [ Monthly Sales ]

Total ounces of gold and silver sold by The Perth Mint in September 2020 as coins and minted bars:

  - Gold (Au): 62,637 oz

  - Silver (Ag): 1,677,383 oz

The Perth Mint sold 1,677,383oz of silver coins and minted bars in September 2020, a 17.2% increase on the previous month and 24.2% ahead of sales in September 2019.

Despite a month-on-month decline of 7%, sales of gold coins and minted bars in ounces were more than 33% ahead of the same period last year.

Higher volumes were attributed to the launch of the Australian Lunar Gold, Silver and Platinum 2021 Coin Series during the month. One of the mainstays of Australia’s official Bullion Coin Program, the latest release celebrates the Year of the Ox, the second animal in the Chinese lunar calendar.

“We established the Lunar coin series back in 1996 and it has consistently been one of our most successful annual releases among both investors and collectors,” said Neil Vance, General Manager – Minted Products.

“We have an expansive network of international distributors for these coins who have ordered strongly again, especially in the United States and Germany where our brand is very well known.”

NB The above chart shows total monthly ounces of gold and silver shipped as minted products by The Perth Mint to wholesale and retail customers worldwide. It excludes sales of cast bars and other Group activities including sales of allocated/unallocated precious metal for storage by the Depository.

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