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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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How does The Perth Mint refinery deliver absolute assay integrity?

Meet Michael Koch, Manager – Laboratory at The Perth Mint refinery. Michael is highly respected throughout the industry, he is chairman of the Standards Australia Precious Metals Committee and has been working in the Mint laboratory for 20 years.

In this interview, Michael explains what sets The Perth Mint apart from others in the sector.

What can producer clients expect from your laboratory when they submit their doré for refining at The Perth Mint? 

Our customers expect absolute assay integrity to ensure that they are paid equitably for the fine content of their doré. This requires exacting standards and a guarantee of the best and most accurate methods of analysis.

It starts with the receipting and melting stage which is designed to ensure we obtain a truly representative sample for analysis. In most cases, samples are analysed beyond the minimum Australian Standard requirement.

Are the laboratory’s expertise and skills formally acknowledged within the industry? 

Definitely. Our laboratory holds accreditation from the world’ five major gold exchanges –

  • London Bullion Market Association (LBMA)
  • New York Commodity Exchange (COMEX)
  • Shanghai Gold Exchange (SGE)
  • Tokyo Commodity Exchange (TOCOM)
  • Dubai Multi Commodities Centre (DMCC)

We undergo regular auditing by these leading organisations to ensure we always meet their very exacting standards.

That’s impressive. In your opinion, what other factors do clients most value about The Perth Mint?

In terms of service, the laboratory delivers 24-hour turnaround times on assay to ensure customers are guaranteed outturns with 48 hours of receipt.

Our accuracy and integrity are underpinned by a commitment to have the best precious metals laboratory in Australia, if not the world. When we re-built our facility in 2017 it was equipped with state-of-the-art equipment capable of solid analysis techniques with considerable improvement to both accuracy and analysis times.

We continue to challenge ourselves by sourcing new equipment and developing techniques to deliver outstanding accuracy and service to our customers.

Clients are also impressed by the fact that we are at the cutting edge of method development and validation in XRF and spark emission technology – a position we’ve reached thanks entirely to our inhouse team of highly experienced chemists.

Bullion analysis is a specialised field of endeavour. It’s not the type of analysis that is offered by many commercial labs. Could you comment on your unique position in the market?

The Perth Mint has been in business for a very long time – 120 years, in fact. That experience is vital because bullion assaying is a very exacting science.

When you are refining more than 300 tonnes of doré annually, you just can’t afford to get it wrong. An assay variation of 0.01% for gold based on our current volumes equates to 3,000 troy ounces, which at today’s prices equates to around AUD 7.5 million!

So, our methods have been perfected over many years to ensure we guarantee and deliver results to the highest level of accuracy each and every time.

Can you give us some unique insights into methods you are talking about?

For example, we use dual stream fire assay analysis – meaning two separate samples are analysed by two separate analysts.

Non-destructive instrumental methods such as XRF is used as a primary screening technique for all customer deposits to characterise the material prior to assay, and our extensive range of equipment enables us to cross validate results using several other analytical techniques prior to final reporting. 

How do you attribute this success to achieving such high standards?  

It really is a testament to the quality and expertise of our team. Collectively, we have more than 150 years’ experience in precious metals analysis.

With the benefit of one of the best equipped laboratories in the world, our accuracy in bullion analysis has been tested to be within 0.001% for gold by the LBMA, the world's premier regulatory body.

We believe our accuracy sets the industry benchmark against which other assayers and refiners are judged.

We note that you are the chairman of the Standards Australia Precious Metals Committee. Can you tell us about your tenure and involvement with Standards Australia?  

I have served on the Standards Australia precious metals committee for more than 20 years and took over as Chairman in 2017 when we conducted a comprehensive review of the AS 3515 and AS 5006 series standards which are specific to bullion analysis.

The committee is made up of the Australia's leading experts in precious metal analysis and our review was undertaken to incorporate changes in technology and refine the scope of the methods where necessary.

The Standards collectively provide a comprehensive range of chemical testing methods for the accurate analysis of gold and silver bullion derived from primary and secondary sources. It has implications for both upstream and downstream processes in the supply chain from gold miners to industries involved in coining, jewellery manufacture, electronics and distribution.

The gold mining and refining industries are the major beneficiaries from the release of these Standards as it guarantees that bullion analysis is carried out accurately and complies with industry best practice methods. The updated methods also provide increased trading certainty for any organisation primarily involved in the refining, trading, marketing and distribution of precious metals throughout Australia and the rest of the world.

Thank you.

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Gold has delivered strong long-term returns

In the first three months of 2020 the price of gold rose by 4% in USD terms, and almost 20% in AUD terms, strongly outperforming global equity markets, which suffered some of their fastest ever falls. This includes the Australian equity market, which declined by almost 25%, its largest quarterly fall on record.

These market dynamics have stimulated significant interest in gold bullion, with the yellow metal finding favour as a highly liquid, zero credit risk safe haven asset.

Whilst market and investor attention on the gold market often picks up in periods of financial market volatility and/or heightened economic uncertainty, the positive role that gold can play in a portfolio is not limited to such environments, with the yellow metal generating strong returns over the long-term.

From the beginning of this century the price of gold rose from under AUD 450 per ounce to more than AUD 2,150 per ounce at the end of 2019. This amounts to an annual average gain of more than 8.0% across the past 20 years.

Not only has the precious metal performed well in absolute terms during this time, but in relative terms as well. The returns on gold have either matched, or in many cases exceeded, the returns generated by other asset classes.

This is illustrated in the chart and table below, which highlight the returns delivered by gold over multiple periods to the end of 2019, as well as the returns delivered by other asset classes including Australian shares and housing over the same timeframe.

Chart: Asset class returns (%) over multiple time periods to end 2019

With returns of 18.86%, 10.63% and 8.32% per annum over the last 1, 3 and 5 years, gold has almost matched returns delivered by equity markets, and comfortably outperformed defensive assets like cash and bonds over this time period.

Over the past 10 years, gold returned almost 6% per annum, again bested only by share markets, with much of that share market outperformance owing to the recovery of equity markets from the more than 50% declines they suffered during the global financial crisis (GFC).

Over 15 years no equity, property, bond or diversified investment strategy has matched the rise in the gold price, with the yellow metal delivering returns of almost 9.5% per annum over this time period.

Strong returns not limited to the last 20 years.

The strong performance of gold is not contained to the new millennium alone, with the yellow metal, despite its short-term volatility, delivering an annual average price growth of almost 9% since the start of the 1970s. This can be seen in the table below, which plots the end of year gold price in USD per troy ounce.

Gold’s upward trajectory in the long-run is highlighted clearly in the above chart, with the price predominantly driven by investment flows (both physical bar and coin demand as well as ETF buying), jewellery demand and central bank buying. 

Given the current monetary environment investors face, and the ongoing economic and financial market risks, there is little reason to believe the long-term upward trend in gold prices will change soon.

The yellow metal looks set to remain an important asset in well-diversified portfolios.


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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Market crash drives gold demand

Executive Summary

 •  Despite a slight pullback in March, gold recorded its sixth straight quarterly gain in Q1 2020, up 4% in USD terms, and almost 19% in AUD terms.

 • Silver fell by 15% in USD terms in March, with the gold to silver ratio rising to over 110. 

 •  Equity markets saw significant declines in March, with the ASX 200 seeing its worst ever quarterly fall during Q1 2020, down by more than 24%

 •  Oil suffered its largest quarterly fall on record, declining by more than 60% in Q1 2020.

 •  Gold demand was strong in March, with record inflows into Perth Mint listed products, whilst sales of minted gold bars and coins topped 90,000 troy ounces, the highest monthly figure since April 2013.

Full monthly review - March 2020

March 2020 was one the most volatile months in financial market history, with declines across a range of asset classes. Equity markets like the S&P 500 in the United States saw their fastest ever fall into bear market territory (typically characterised as a decline of more than 20%), with the market dropping by more than 30% from their highs seen in late February 2020.

Australia was not spared, with the local ASX 200 falling by over 20% in March, leading to a calendar quarter decline of almost 25%. The price of oil also dropped by over 50% in March alone, with ‘black gold’ seeing its largest quarterly decline on record.

The growing threat from coronavirus has been the primary cause of the decline in equity markets globally. The extreme measures being taken to slow the spread seem likely to lead to global recession in the coming quarters.

Economic output is likely to fall by a far larger amount in aggregate than it did during the worst of the Global Financial Crisis (GFC), with almost 10 million American’s filing for unemployment in the last two weeks alone.   

The volatility in financial markets and the threat to the economic outlook has led to a range of emergency fiscal and monetary policies being enacted around the globe. In the United States,  the US Federal Reserve made an emergency interest rate cut of 0.50% in early March, and followed this up with a 1% cut on March 16.

The Fed has also launched what is a potentially unlimited quantitative easing (QE) program, with their balance sheet already rising above USD 5.2 trillion. On the fiscal side, the Trump administration is looking at over US 2 Trillion in stimulus spending.

In Australia, the Federal government has announced stimulus plans of over 100 billion dollars. The Reserve Bank of Australia (RBA) cut interest rates from 0.75% to 0.25% in March and implemented their own Quantitative Easing (QE) program.

Given this backdrop, it is unsurprising that defensive assets rose amongst strong demand in Q1 2020. US and Australian 10-year government bonds saw yields fall by 46% and 63% respectively, ending the quarter below 0.80%, whilst the US dollar index also rose by over 3% during the quarter. 

Gold as the ultimate safe haven asset was also well supported in Q1 2020, with investment interest in the yellow metal picking up considerably. Perth Mint gold coin and minted bar sales more than quadrupled between February and March 2020, whilst silver sales tripled.

Additionally, our ASX listed product Perth Mint Gold (ASX: PMGOLD) saw more than 23,000 ounces of inflows in March 2020, almost double the previous record for any calendar month.

Some argue that the gold price should be higher than its current level given the sheer scale of the sell-off in equity markets during Q1 2020, but in many ways the price action is similar to the Global Financial Crisis (GFC).

Back then, gold actually sold off for a short period of time, as investors rushed to liquidate whatever they could, before rocketing higher as monetary stimulus saw investors turn toward the precious metal.

This can be seen in the chart below, which plots the price of gold (gold line) and the index level of the S&P 500 (red line) from 2007 to 2009.

The chart highlights the fall in the USD gold price from mid-March to November 2008, with the yellow metal falling almost 30%, whilst equities fell by almost 50% over this time period.

Gold recovered back above USD 1,000 per troy ounce by the end of 2009, and continued to climb strongly in 2010 and 2011, with the price almost tripling in a three-year period from the late 2008 low.

The key driver of that gold price rally was the monetary policy decisions taken by the US Federal Reserve, who over 10 years ago slashed interest rates to zero, and began QE programmes much like they are today.


Short term there are a number of factors which could push the price of gold in either direction, some of which are listed below.

Potential headwinds

 • Gold and the USD have risen together for most of the last 18 months, but continued US dollar strength could hold gold back, especially if we see a sharp spike higher in the greenback.

 • Low and rapidly declining inflation expectations may subdue gold prices, though gold has rallied strongly in prior periods of low inflation.

 • Russia halting official purchases of gold takes out a large buyer, though net central bank demand is likely to remain positive in 2020.

 • Sell off in silver and gold stocks: Strong precious metal bull markets often see silver and gold stocks outperform gold to the upside. This has not happened this time, with the gold to silver ratio ending Q1 2020 above 110, a huge increase from end 2019 when the ratio was just 85. Gold stocks (as proxied by GDX) were also down, falling by over 20% for the quarter. 

Potential tailwinds

 • Gold is strongly outperforming equities, with the S&P 500 to Gold ratio dropping from 2.13 at end December 2019 to 1.77 by end March 2020. This should help attract additional inflows from investors. 

 • Emergency fiscal stimulus and monetary policy easing are likely to support gold, with the balance sheet of the US Federal Reserve already exceeding USD 5 trillion. Unlike prior iterations of quantitative easing, there appears to be no upper limit to the current programme.

 • The majority of global sovereign debt now trades at negative real yields, making gold a high yield (and zero credit risk) investment in comparison.

 • Continued uncertainty regarding the impact of coronavirus on economic growth should also help support gold, even if a global recession is now the ‘base case’ for most investors.

Managed money speculators have also cut their gross long positions by more than 40% since mid-February 2020, meaning substantial froth has come out of the market in the past six weeks. The importance of this sector of the market can be seen in the chart below, which plots managed money gross long and gross short positions from late 2017 to today.

The chart highlights the large build up in managed money long positions, and the complete unwind of managed money short positions between September 2018 and February 2020, with this activity playing a key role in the gold rally over this time period.

The other factor which will impact gold in the coming quarters is the performance of equity markets. Coming off one of the worst quarters on record, one would not be surprised to see a rally, especially given the sheer scale of monetary and fiscal stimulus being deployed across the G20. Indeed, some equity markets already rallied almost 20% in late March.

Against this, investors need to bear in mind that whilst equity markets are cheaper, they are hardly cheap. It seems like a lifetime, rather than a month ago that we wrote this article  warning about historically high price to earnings and price to sales ratios.

The crash in the equity market has driven these ratios down, but one suspects the denominator for both ratios (earnings and sales) has a long way to fall in the coming quarters, with some earnings predicting double digit declines. Many listed companies are also openly stating that they’ll no longer engage in buybacks, a process which has provided a huge boost to earnings ‘growth’ over the last decade.

There is also the question of whether or not we will see a V, a U or an L shaped economic recovery once the threat of coronavirus has been sufficiently contained. Given no one can determine when a proper recovery can even begin, nor how much monetary and fiscal largesse will be required to keep economies on life support, the jury is still well and truly out in this regard.

Given these factors, we remain constructive on the outlook for gold, and the role it can play in well diversified investment portfolios.


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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Monthly holdings report - PMGOLD soars in March 2020

Topics [ Perth Mint Gold ]

Perth Mint Gold (ASX: PMGOLD) holdings soared in March 2020, hitting a new all-time high of 174,475 ounces (5.43 tonnes), with inflows of almost 25,000 ounces for the month.

Monthly flows into PMGOLD can be seen in the chart below, with March 2020 seeing the fastest pace of inflows on record, almost doubling the prior record set back in August 2019.

Source: The Perth Mint, ASX, Reuters

Inflows in March continue a strong run for PMGOLD that dates back to September 2018, with total holdings more than doubling over this time period.

The value of PMGOLD holdings also topped AUD 440 million for the first time in March 2020, driven by the record inflows, as well as the 2.95% rise in the Australian dollar gold price, which ended the month trading above AUD 2,500 per troy ounce.

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

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Monthly Sales - March 2020

Topics [ Monthly Sales ]

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

  - Gold (Au): 93,775 oz

  - Silver (Ag): 1,736,409 oz

NB This 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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