10th of October 2008
The Perth Mint, producer of 10 percent of the world’s bullion, doubled output in the past six months, joining a global push to boost production as investors seek protection from the credit crisis.
Perth Mint sold so-called Kangaroo and Nugget coins weighing a total of 62,630 ounces in the three months to Sept. 30, compared with 154,501 ounces for the 12 months to June 30, senior manager Bron Suchecki said in an interview from Perth, Australia yesterday, adding there’s been a surge in “moms and dads” buying over the counter in the past three months.
“It’s reflecting a real breakdown in trust in financial products,” Suchecki said at the mint. “People aren’t thinking `how do I grow my wealth’ but `how do I protect it.”’
Gold for immediate delivery has jumped 10 percent in the past week as investors pulled a record $52.1 billion from U.S.-managed stock and bond mutual funds. The U.S. Mint and Austria’s Muenze Oesterreich AG are among coin makers to increase production.
“People are rushing to buy gold purely as a safe haven,” Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said in a phone interview today. “The premiums at the moment for physical gold are going through the roof. Physical sellers are slowly running dry. It’s pretty much the only bright spark among commodities.”
As well as producing coins, the mint holds about A$1.5 billion ($1 billion) of gold on deposit for investors, about 90 percent of whom are from overseas, up from A$880 million a year ago, Suchecki said. It doesn’t give figures for the amount held.
“There are people that want physical gold as a kind of insurance against financial calamity and breakdown of society,” Suchecki said. “You can’t get an insurance policy to cover against that. These types don’t really care what happens to the gold price.”
The Perth Mint, founded in 1899, employs about 250 people, working three shifts a day, every day. Formerly a branch of Britain’s Royal Mint, it’s controlled by the Western Australian government and owns a 40 percent stake in AGR Matthey, Australia’s only major gold refiner.
Kangaroo coins, the mint’s biggest sellers, weigh as much as 1 ounce; Nuggets are coins with higher weights.
Since Lehman Brothers Holdings Inc.’s Sept. 15 filing for bankruptcy protection, gold for immediate delivery has jumped 19 percent, the Standard & Poor’s 500 Index has slumped 27 percent and the benchmark Australian stock index has lost 16 percent.
Muenze Oesterreich, which makes the world’s second highest- selling gold coin, increased output of the Philharmonic almost fourfold and doubled production of gold bars in the past year, Vienna-based Marketing Director Kerry Tattersall said yesterday. The 800-year-old mint, located in a former Habsburg palace, has also added a third work shift to press more coins.
The U.S. Mint said Oct. 6 it had exhausted some of its supplies of bullion coins and was trying to meet demand for gold, silver and platinum. South Africa’s Rand Refinery Ltd. temporarily ran out of Krugerrand gold coins after “unusually large” orders, the company said Aug. 28.
While the value of iron ore, oil and other commodities sinks due to fears of a global recession, gold companies in Australia, which is the world’s third-biggest producer of bullion, are profiting. Newcrest Mining Ltd., Australia’s largest gold miner, rose the most in nine years in Sydney yesterday while Lihir Gold Ltd. gained 12 percent, the most in three weeks.
The International Monetary Fund said the global economy may be headed for a recession next year and increased its estimate of losses tied to loans and securitized assets to $1.4 trillion, up from $945 billion estimated in April.
“I see this demand continuing while there’s this uncertainty,” Suchecki said. “But I don’t think we’re at the point where the average person who’s never bought gold before is suddenly trying to buy physical gold. There’s not that mass-market demand as yet.”