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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 should SMSF trustees invest in gold?

A nest full of golden eggs

Precious metals were at the forefront of investors’ minds in 2020, as the fallout from the COVID-19 crisis saw the price of gold rise by more than 20%, with investment demand soaring.

Despite the pullback in the gold price seen in Q1 this year, the investment environment in the years ahead is likely to remain supportive for gold.

For investors wanting to build a well-diversified portfolio, the precious metal can offer several key benefits, including the fact that it has:

    • Historically outperformed in low real interest rate environments, with the gold price typically increasing by approximately 20% per annum in years the real cash rate in Australia was 2% or lower.

    • Historically been the best performing asset in the months, quarters and years that the share market falls. For example, in the worst five years for Australia’s equity market (where stocks on average fell by 24%), the price of gold increased on average by 39%.

How to invest in gold

Separate to the discussion on why to invest in gold, is the question of how.

Note that for the purpose of this article, we are excluding gold miners from the equation, as although they are exposed to the gold price, they do not mimic the return on gold itself, with a range of factors that can lead them to outperform, or underperform the precious metal.

The table below highlights three main ways investors access gold these days, with The Perth Mint offering all of these options to its clients. The table also highlights the potential advantages and drawbacks of each option for investors like SMSF trustees to consider.

While physical bars and coins which people self-store (for example at home) will forever remain an important part of the overall gold market, they are less popular with SMSF trustees for a number of reasons, including the fact they are typically more expensive to buy and sell.

For this reason, SMSF trustees tend to invest in gold via:

A depository account like The Perth Mint’s Depository Online option

This is similar to a share trading account, but instead it is used to buy and sell gold and other precious metals which are held in custody by The Perth Mint on behalf of investors.

As an example, The Perth Mint Depository Online option allows SMSF trustees to trade 24/7 without the worry of having to store the metal themselves.

Valuations can also be provided to facilitate the reporting requirements SMSF trustees must adhere to.

A gold ETF like Perth Mint Gold (ASX:PMGOLD)

Bought and sold like regular shares via a stockbroker or online trading account, gold ETFs are becoming the most popular way for SMSF trustees to invest in gold.

Gold ETFs also tend to be the lowest cost way of accessing gold, with trading spreads that are cheaper than buying bars or coins. Management fees are also very competitive. As an example, ASX:PMGOLD has a management fee of just 0.15%.

Gold ETFs are arguably the easiest way for SMSF trustees to invest in gold, given the vast majority already own shares and can therefore make an investment out of their existing brokerage account.

For a more detailed read on the key reasons why investors like SMSF trustees are turning to gold, please access our latest SMSF investment whitepaper.

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What to look for when choosing a gold ETF

businessman pointing to the word ETF

In the last 15 years, gold exchange traded funds (ETFs) have become an increasingly popular way for investors, including SMSF trustees, to gain exposure to the precious metal in their portfolio.

Australia was at the forefront of the development of the gold ETF market, with the Australian Securities Exchange (ASX) listing gold ETFs, including Perth Mint Gold (ASX:PMGOLD), ahead of most international exchanges in 2003. 

Bought and sold like a regular share, such products track the price of gold, offering the same economic exposure to investors as physical gold bars or coins, without the need for investors to personally store the gold bullion themselves.

This tends to make them easier and more liquid to trade from an investor’s perspective, while the fact they are listed on a regulated exchange provides additional comfort.

Gold ETFs also tend to be the lowest cost way for investors to incorporate gold into their portfolio, with transaction spreads that are typically sub 0.10% to buy and sell. This means a AUD 50,000 investment into a gold ETF would likely only incur a cost of AUD 50 maximum plus brokerage.

Whilst most gold ETFs do a very good job of tracking the gold price itself, they are not all created equal. Below is a list of questions investors would be well served considering when it comes to picking a gold ETF should they decide to allocate a portion of their portfolio to the precious metal.

Questions to ask when picking a gold ETF – and the answer for Perth Mint Gold (ASX:PMGOLD)

What is the management fee?

Management fees paid to the product issuer eat away at the net return an investor earns on any asset class, including gold. All other things being equal, the lower the management fee the better, so if the gold ETF you are looking at charges more than its peers, it’s certainly worth asking why.

ASX:PMGOLD charges a management fee of just 0.15%.

Who is the product issuer?

It is critical to know the background of the organisation issuing any financial product, including gold ETFs. When was it founded? Who owns the company? How big is its balance sheet? What expertise does it have in the precious metal market? These are all questions worth asking when assessing a gold ETF.

ASX:PMGOLD is issued by Gold Corporation (which trades as The Perth Mint). Gold Corporation has more than a century of experience dealing in precious metals. It is 100% owned by the Government of Western Australia, has more than AUD 6 billion in assets and turns over more than AUD 20 billion in precious metals each year.

Who are the counterparties to the gold ETF?

Apart from the product issuer, most, though not all, gold ETFs will have at least three other counterparties. These include the trustee, the custodian (where the gold sits), and the market maker (or market makers), who provide liquidity to the product.

ASX:PMGOLD is fully operated by Gold Corporation, which is the issuer, custodian and market maker for the product.

Who holds legal title to the gold backing the product?

This is arguably the most important risk factor to analyse when picking a gold ETF. In nearly all cases, investors in a gold ETF don’t actually own title to the gold itself. They own a financial instrument, with that financial instrument backed by gold holdings.

The custodian of the gold might be the owner, or it might be a trustee company. It is worth asking that question and making sure you are comfortable with the answer, as that custodian or trustee is arguably your primary counterparty.

ASX:PMGOLD is backed by gold held by The Perth Mint on behalf of the fund investors.

How is the gold backing the product sourced?

It is worth asking the product issuer of a gold ETF where it sources the gold backing its product. Some may be entirely reliant on the gold custodian they use because they don’t have access to gold themselves.

ASX:PMGOLD is backed by gold The Perth Mint sources in the marketplace. This includes gold from Australian gold miners, who produce more than 300 tonnes per year. Australia has been the second largest gold producing country in the world over the last ten years, with The Perth Mint refining the vast majority of this gold.

Where does the gold physically sit?

It is worth knowing where the gold backing an ETF is sitting. Most gold ETFs use reputable high-profile gold custodians, but there can still be a degree of jurisdictional risk if the gold is physically sitting outside Australia.

ASX:PMGOLD is backed by gold stored in The Perth Mint’s vaults and across its operations, including both the refinery and minting divisions.

What form is the gold stored in?

Some gold ETFs are backed by allocated metal, which means numbered bars that typically sit in a vault, owned by the trustee, or custodian, on behalf of the product investors. Others are backed by unallocated metal, which can include gold that is in numbered bars, as well as gold that is being refined, cast or minted.

ASX:PMGOLD is backed by gold held in unallocated form in The Perth Mint’s vaults and across its refining and minting operations.

How is liquidity provided to the product?

All gold ETFs require market makers to provide liquidity to the product, meaning they will be there to sell units to investors that want to buy them, or buy units from investors that want to sell them.

It is worth asking whether the product issuer does the market making itself (this alone is a good indication it has a sizeable balance sheet and expertise in precious metals trading directly), or whether or not it outsources this function.

ASX:PMGOLD market making is provided by The Perth Mint directly. As such, investors benefit from the more than AUD 20 billion in liquidity that The Perth Mint accesses in the global precious metals marketplace.

Can your investment be redeemed for physical gold, and if so, how?

A key attribute of a gold ETF is whether or not the ETF holdings can be converted into physical gold for delivery or not. Some can’t be converted at all, whilst others may require overly complex processes that make it all but impossible to do.

While most investors who buy gold ETFs will likely end up selling them for cash, knowing it can be converted into physical gold is an additional level of security.

ASX:PMGOLD investors can redeem their holdings into physical gold bars manufactured by The Perth Mint. Investors simply need to fill in an Exercise Notice (which is contained within the PDS), and The Perth Mint will provide the gold bars the investor has requested, which can be delivered anywhere in Australia, or collected from its offices in Perth.

Are there any additional investor protections in place?

It is worth considering what investor protections are in place should something happen to the gold custodian who is storing the precious metals backing a gold ETF.

ASX:PMGOLD investors are protected by the unique government guarantee that protects all investors in The Perth Mint Depository.

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Bargain hunters stock up as gold prices fall

gold figures of a bull and a bear

Gold prices continued to correct in March 2021, suffering a 3% decline and ending the month below USD 1,700 per troy ounce. Multiple factors have driven the correction, with sentiment reading showing the market is now deeply unloved. While volatility is expected to persist, the correction in prices since August last year may be close to ending, with astute investors adding to their holdings during the recent weakness.

Summary of market moves:

• The Australian dollar gold price fell by just 1.50%, finishing the month trading above 2,200 per troy ounce. Over the past year, Australian dollar gold prices are now down by just over 15%, with the pullback largely driven by the increase in the value of the local currency, which rallied 23% in the 12 months to March 2021.

• Silver also fell sharply during March, ending the month down by more than 10%. YTD it is still outperforming gold, with the gold to silver ratio ending Q1 2021 at 70

• Global stock markets continued to rally in March, with the S&P 500 in the US increasing by 4%. In early April, the index topped 4,000 points for the first time.

• Yields in the US continued to climb, with 10-year bonds ending March with a yield of +1.74%, up from +1.44% at the end of February. This contributed to the continued increase in real yields, though they remain negative on all Treasury bonds with maturities of 20 years or less.

• US dollar strength was also a contributor to precious metal price weakness, with the US Dollar Index (DXY) rising by 3% during March.

Full report - March 2021

Gold and silver prices continued to weaken in March, with the precious metals falling by 11% (gold) and 9% (silver) in the first three months of 2021. The decline in the gold price represents the third largest quarterly decline and the weakest start to a year in two decades.

There were multiple factors contributing to the sell-off, which has now seen the US dollar gold price pull back by almost 20% since it hit all-time highs in August 2020. These factors include a rally in the US dollar, which rose by close to 3% in March, as well as an increase in real bond yields.

Soaring prices for cryptocurrencies also chipped away at gold demand, with Bitcoin trading near USD 60,000, while a range of crypto-friendly developments contributed to a weakening in sentiment toward precious metals.

Finally, continued strength in equity markets, with the S&P 500 topping 4,000 points in early April, combined with rising optimism regarding economic growth amid continued fiscal and monetary support, have also limited safe haven demand for gold, even as inflation expectations continue to rise.

In this detailed market report, we look at a range of factors from bond yields, to inflation rates, to gold’s interplay with commodities, as well as demand in the ETF, gold futures and bar and coin market, to gauge where precious metals sit today and contextualise their recent performance.

The report finishes by looking at sentiment in the gold market and why, perhaps more than any other factor, it encourages us that the correction in gold may be nearing its end, with the precious metal already reclaiming the USD 1,700 per troy ounce level in early April.

Yields and inflation

One factor that has contributed to the sell-off in gold has been the increase in bond yields.

This can be seen in the table below, which plots the nominal bond yield on a range of US Treasury bonds on 6 August 2020 and 31 March 2021, as well as gold prices on those days.


2 year

5 year

10 year

20 year

30 year

Gold price















Source: US Treasury

Rising yields, particularly at the longer end of the market, have been a factor pulling gold down, as these higher yields represent an increased opportunity cost of investing in the precious metal.

Given the market expects that economic growth rates will continue to improve and that record levels of fiscal stimulus will see continued upward pressure on bond yields, it is understandable why many think the outlook for gold is still troubled at best.

Logical as this may sound, market history demonstrates very clearly that gold often thrives in environments where nominal bond yields are rising.

Consider that in the 1970s, the US 10-year bond yield rose from close to 6% to more than 12% (it peaked closer to 15% in 1981). In that 10 years bond yields doubled and the gold price rallied from under USD 50 to more than USD 580 per troy ounce.

In the early 2000s we saw a similar phenomenon at play. In May 2003 the US 10-year bond yielded 3.37%. By June 2006, the yield on the US 10-year hit 5.15%, an increase of 50% relative to where it sat in May 2003. Over the same period, the gold price rose by almost 85%, increasing from USD 341 to USD 629 per troy ounce.

Clearly, nominal yields are only one factor at play, with changes in inflation dynamics helping to provide a better understanding of gold price movements.

Over the past six months, while inflation and inflation expectations have continued to rise (the US 10-year breakeven inflation rate has gone from +1.63% to +2.37%), real yields have increased, with the US 10-year treasury bond seeing its real yield climb from -0.94% to -0.63%.

It’s also worth stating that while inflation (CPI) rates are rising, they remain comfortably toward the lower end of the historical range, with official US CPI increasing by just 1.7% in the 12 months to end February 2021.

Inflation rates are also coming off a very low base, driven by the collapse in economic activity and in commodity prices that took place last year.

Given this backdrop, both the market and policymakers are likely to ‘look through’ rising inflation rates for most of 2021 at least, with many seeing a returning inflation impulse as a good thing and a sign of a rebounding economy.

This in part explains why gold has pulled back the way it has in the last six months.

Commodity prices soaring – why not gold?

Another factor confounding some investors is the fact that broader commodity indexes have soared in the past six months, with energy, agriculture and industrial metal indices up anywhere from 20-35% since August, while gold has fallen.

On the surface this might seem strange, but the World Gold Council (WGC) published a great article on this phenomenon in late March. Titled Gold, commodities and reflation, it noted that gold’s weak performance in the last few months is consistent with past reflationary episodes.

The article also noted that the bounce in commodities has come off a multi-decade low as a base. Gold, by contrast, started 2020 trading at more than USD 1,500 per troy ounce, having risen by almost 20% in the preceding year, and of course increased in value during Q1 2020. By contrast, commodity prices, which were broadly flat in 2019, cratered during the first quarter of last year, falling by almost 25%.

Given such vastly different starting points, it should be no surprise that commodities have outperformed gold as strongly as they have over the last six to 12 months.

Looking ahead, there is reason for precious metal bulls to be enthusiastic, as the WGC report noted that: “gold has on average caught up to most major commodity groups by the second and third years from the start of a reflationary period since 1991.”

Gold futures market and ETF positioning

Since the correction in precious metal prices that began in August last year, speculators who use the futures market to express a view on gold, and ETF holders, have drastically trimmed their positions.

In the gold ETF space, more than 310 tonnes of gold have been divested since September 2020, when total holdings hit an all-time calendar quarter high of just over 3,880 tonnes. The market value of these gold ETF holdings has declined by closer to 20% over this time period, having fallen by more than USD 45 billion.

To put it in context, the sheer volume of outflows from gold ETFs seen over the last six months has only been outpaced once. That was back in 2013, when the gold price fell by more than 25%, with total gold ETF holdings falling by more than 30% that year.

In the futures market, managed money long positions declined to just 113,000 contracts by the end of March 2021. That is a decline of almost 60% relative to where positioning was back in late February 2020. It’s also almost 30% lower than average long positioning seen in the market since 2009.

Meanwhile, the managed money gross short position in the gold market was almost 70,000 contracts at the end of March, up from closer to 10,000 contracts a year ago.

While part of the absence of short positioning in the market a year ago was a result of the logistical challenges of moving gold during peak COVID uncertainty (spreads between spot gold and the nearest dated futures contracts blew out as a result during this period), there is no doubt the market is far more cautiously positioned today.

This can be seen in the chart below, which highlights gross long and gross short positions, as well as the US dollar gold price from 2009 through to end March 2021.

Source: CFTC, Y-charts, The Perth Mint

This chart is another indicator that the precious metal market has either already bottomed or is in the process of doing so. In the past decade, managed money readings have only twice been as, or more cautious than, they are today.

The first time was in 2015, when gold was ending a four-year bear market cycle, and again in late 2018, when the precious metal was trading below USD 1,200 per troy ounce.

Both occasions proved to be a good time to add precious metals to an investment portfolio.

Physical demand rising

While the gold ETF market continues to see outflows and the futures market continues to see speculators unwind their positions, there are more encouraging signs in the physical market for bars, coins and jewellery, particularly in key consumer nations like China and India.

A late March article in the South China Morning Post noted that gold jewellery sales at big urban retailers in China had more than doubled during the Lunar New Year holiday compared with sales figures in 2020, while jewellers in India were expecting to see solid demand lasting until May at the earliest.

Here at The Perth Mint, we are seeing extremely high levels of demand for minted gold and silver bars and coins, which are the products favoured by retail investors who want to physically hold their precious metal investments (versus using our Depository or ETFs like ASX:PMGOLD which also offer gold price exposure).

In March, The Perth Mint sold more than 130,000 troy ounces of gold and almost 1.6 million troy ounces of silver in minted product form, which was shipped to clients worldwide. These figures are 285% higher (gold) and 178% higher (silver) than average monthly sales dating back to 2012.

For Q1 2021, The Perth Mint sold more than 330,000 troy ounces of gold and more than 4.5 million troy ounces of silver in minted product form. These figures represent the highest calendar quarter on record for gold and the fourth highest calendar quarter on record for silver.

Troy ounces of gold and silver sold as coins and minted bars
December 2018 to March 2021

Outlook for gold - sentiment couldn’t be worse

One factor that may encourage precious metal bulls is the fact that sentiment readings toward gold in particular are incredibly depressed. Almost no one in the mainstream financial media is bullish about gold right now, while many are almost outright mocking gold as an investment.

This was perhaps best encapsulated in a Bloomberg update from early April, which stated that it was “time to officially bury Goldbug Macro”. The article noted that despite the fact the US Federal Reserve has seen its balance sheet rise from under USD 3 trillion to almost USD 8 trillion in the last 10 years, the gold price is only up about 10% in US dollar terms.

It also noted how benign official inflationary pressures have been over this time period, with the author noting that: “After two huge crises in just over a decade, plus fiscal and monetary stimulus the likes of which we haven't seen before, we now have enough evidence to bury the economic fantasies of gold's most ardent believers.”

This is exactly the kind of commentary one expects to see toward the end of a correction, not just in gold but in any asset class. No one would have felt confident printing an article like that back in August 2020 when the gold price was above USD 2,050 per troy ounce, sentiment was red hot, and analysts were tripping over themselves to publish ever higher price forecasts.

The Bloomberg article isn’t the only example of how bad sentiment toward precious metals is today. In early March, an article titled Gold Timers Are Finally Throwing in the Towel was published on thestreet.com.

Author Mark Hulbert opened the article with the following statement (bold emphasis ours): “Take heart, long-suffering gold traders: A sustainable rally is getting close. I base this forecast on a contrarian analysis of sentiment among several dozen gold market timers. Collectively, they are now more pessimistic than at almost any other time over the past two decades.”

Hulbert’s insights were backed by data from Sentimenttrader.com, which also suggested the market was more bearish on gold by late March 2021 than it had been at any point in the past 20 years.

Combine this with technical readings that also suggest the market is deeply oversold, and it is little wonder contrarian investors are now busy adding to their precious metal positions.

Articles of interest






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 sees record gold sales in Q1 as precious metal prices continue to ease

rows of gold coin blanks


• Perth Mint minted product sales for both gold and silver remained strong during March, with more than 130,000 troy ounces of gold and almost 1.6 million troy ounces of silver shipped to clients worldwide. These figures are 285% higher (gold) and 178% higher (silver) than average monthly sales dating back to 2012 

• Perth Mint Depository holdings of gold and silver remained flat during March, with total holdings for both metals 11% higher than they were one year ago.

• Perth Mint gold ETF holdings declined by 1.5% in March, mirroring outflows seen across the global gold ETF market, which have seen total holdings drop by almost 9% since all-time highs seen in October 2020.


Gold and silver prices continued to weaken in March, with the precious metals falling by 11% (gold) and 9% (silver) in the first three months of 2021.

There have been multiple factors contributing to the sell-off, which has now seen the US dollar gold price pullback by almost 20% since it hit all-time highs in August 2020. These factors include a rally in the US dollar, an increase in real bond yields (US 10 year Treasuries moved from -1.06% at end December 2020 to -0.63% at end March 2021), soaring prices for cryptocurrencies with Bitcoin trading near USD 60,000, up ten times in the last year, and continued strength in equity markets with the S&P 500 topping 4,000 points in early April.

Manager, Listed Products and Investment Research, Jordan Eliseo says, “The pullback in prices has led to a spike in demand for minted products. In Q1 2021, The Perth Mint sold more than 330,000 troy ounces of gold, and more than 4.5 million troy ounces of silver. These figures represent the highest calendar quarter on record for gold, and the fourth highest calendar quarter on record for silver.”

Minted Products

The Perth Mint shipped more than 130,000 troy ounces of gold coins and minted bars in March 2021, and almost 1.6 million troy ounces of silver. The sales figures represent a continuation of a strong period of demand for Perth Mint minted products, with calendar quarter gold sales their highest on record.

General Manager Minted Products, Neil Vance, reported that coin production in March took up where February left off. “The market continues to take everything we can make at present,” he said, citing above average demand in key markets such as the United States and Germany. “Production remains concentrated on our most popular 1oz Kangaroo coins and while we just about satisfied demand for gold this month, interest in silver is outstripping our capacity to convert plentiful supplies into finished goods.”

Troy ounces of gold and silver sold as coins and minted bars
December 2018 to March 2021

Graph depicting Troy ounces of gold and silver sold as coins and minted bars between December 2018 and March 2021

The Perth Mint manufactures and markets the Australian Precious Metal Coin and Minted Bar program. Trusted worldwide for their purity and weight, the coins include annual releases of the renowned Australian Kangaroo, Kookaburra, Koala and Lunar series. For more product information visit perthmintbullion.com

The Perth Mint Depository

Holdings of both gold and silver in The Perth Mint Depository were largely flat in March 2021, ending the month at 1.854 million troy ounces (gold) and 37.8 million troy ounces (silver).

Despite the recent stagnation, total holdings of both gold and silver are up 11% in the last 12 months, with the emergence of COVID-19 and the fiscal and monetary policy response encouraging investors to add precious metal positions to their portfolios.

Total troy ounces of gold and silver held by clients in The Perth Mint Depository
June 2018 to March 2021

Graph depicting the total troy ounces of gold and silver held by clients in The Perth Mint Depository between June 2018 and March 2021

The Perth Mint Depository enables clients to invest in gold, silver and platinum, with The Perth Mint storing this metal in their central bank grade vaults. Operated via a secure online portal, a Depository Online Account allows investors to buy, store and sell their metal 24/7. For further information visit perthmint.com/storage.

The Perth Mint Depository enables clients to invest in gold, silver and platinum, with The Perth Mint storing this metal in their central bank grade vaults. Operated via a secure online portal, a Depository Online Account allows investors to buy, store and sell their metal 24/7. For further information visit perthmint.com/storage.

Perth Mint Gold (ASX: PMGOLD)

Holdings of Perth Mint Gold (ASX: PMGOLD) fell by 1.5% in March 2021, with the outflows seeing total holdings in PMGOLD decline to 230,279 troy ounces, or just over 7.15 tonnes.

Monthly flows for PMGOLD and the yearly change in total troy ounces can be seen in the chart below, with holdings rising by more than 55,000 troy ounces (+32%) in the last 12 months.

Monthly change in troy ounces held by clients in Perth Mint Gold (ASX:PMGOLD)
January 2015 to March 2021

graph depicting the monthly change in troy ounces held by clients in Perth Mint Gold between January 2015 and March 2021

Source: The Perth Mint, ASX, Reuters

The value of PMGOLD holdings also fell in March, ending the month just above AUD 510 million. Despite this decline, the value of gold holdings backing PMGOLD has risen by 13% in the last 12 months. 

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

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