November 26, 2022

Perth Mint Introduces Australian Platypus Platinum Bullion Coins

On March 1, 2011, the Perth Mint of Australia introduced a new platinum investment coin to complement the gold and silver offerings of their official bullion program. The Perth Mint has not offered a platinum investment coin since the withdrawal of the Platinum Koala in 2000, however they do produce certain platinum numismatic coins.

The Australian Platinum Platypus contains one troy ounce of 99.95% platinum. The design features the native aquatic mammal diving beneath the water. Above the scene is the inscription “Australian Platypus” with the date of issue, bullion weight, and purity indicated below. The other side of the coin features a portrait of Elizabeth II with the legal tender face value of “100 Dollars”.

The current market price of platinum is $1,835 per troy ounce. Last year the price of platinum rose by 18.08%, under performing gold, silver, and palladium. For the year to date, platinum has risen about 6%. This compares to gains of 1.24% for gold, 15.25% for silver, and 1.77% for palladium.

A maximum of 30,000 Platinum Playpus coins will be issued by the Perth Mint during 2011. All future annual releases will carry the same limit.

Other world mints that offer platinum bullion coins include the Royal Canadian Mint with their Platinum Maple Leaf offering. In the past, the United States Mint has American Platinum Eagle bullion coins, however these have not been issued since 2008. Initially, production was halted in an effort to deal with surging demand for gold and silver bullion coins.

Perth Mint Forecasts Jump in Silver Coin Sales

The Perth Mint is operated by Gold Corporation, which is wholly owned by the Government of Western Australia. The Perth Mint currently refines all of the gold mined in Australia, as well as gold from surrounding countries, and scrap gold from Asia. In addition, they refine substantial quantities of silver.

The latter has been favored by Sales and Marketing Director Ron Currie, who stated, “There seems to be more upside with silver than gold right now.”

The State of Silver

Currie’s statements come as the Perth Mint provided their outlook for silver coin sales to increase by more than 50% for the year. The Perth Mint sells investment gold and silver coins and bars to customers throughout the world. They recently launched a website which allows Australian customers to purchase bullion products at live prices.

Other world mints have also recently provided forecasts for higher silver bullion sales. The Royal Canadian Mint, which offers silver bullion coins like the Silver Maple Leaf, forecast an increase in silver coin sales of more than 50% for the year. For 2009, silver coin sales had reached 10,300,000 ounces.

Sales of the United States Mint’s American Silver Eagle bullion coin recently moved into record territory for the year to date. The latest figures available from their website show sales of more than 32,500,000 ounces for the current year.

Silver or Gold?

The recent move towards silver investment, comes as the price of silver has been outperforming gold. For the year to date, silver has risen by about 57%, while gold has gained about 25%.

This recent divergence has resulted in a decline in the gold/silver ratio. This ratio measures the  number of ounces of silver it takes to purchase an ounce of gold. The ratio had spiked to more than 80 in late 2008, and was above 70 as recently as February of this year. Currently, the ratio stands at about 51 ounces of silver to 1 ounce of gold.

During the era when gold and silver were used in circulating U.S. coins, the ratio was officially set at 15 to 16. Within the earth’s crust, gold and silver naturally occur at a ratio of about 17.

Gold and Silver Paper and Physical Markets Realign

Late last year and early this year, a continual observation of the gold and silver markets was the disconnect between the prices quoted on paper markets and the prices that you would actually need to pay to buy physical precious metals. In the past few weeks premiums for physical gold and silver have declined as the prices quoted on the paper market have risen, basically bringing the two markets back into alignment.

Back in October 2008, I had examined 100 ounce silver bars as an example of the excessive premiums being paid for physical precious metals. I collected some data from recently completed eBay auctions that showed the average price of the 100 ounce silver bar ranging from $1,329 to $1,557 while the market price of silver ranged from $8.88 to $10.89. This represented premiums ranging from $39.62% to 56.45%. This was particularly ridiculous since the 100 ounce silver bar has been traditionally viewed as a low premium method for silver investing.

Reviewing some data for eBay auctions completed yesterday now shows the prices paid for 100 ounce silver bars ranging from $1,450 to $1,500. At yesterday’s closing price of silver of $14.09, this represents a much more reasonable premium of about 3% to 6%.

Peculiarly, the decline in premium is a close match to the increase in price for spot silver. If you invested in silver by buying physical bars back in October, you might be showing zero profit even though the market price is up over 40%.

Future Gold and Silver Price Implications?

When the premiums for physical precious metals were high, it was viewed as a sign of heavy demand amidst a diminished supply that would eventually force market prices to move higher. Now that the disconnect between the paper and physical markets has seemingly resolved itself, is this a signal of slower demand that will lead to lower prices?

Despite the implication of slower demand, I think the realignment of the markets represents a long term positive for the price of gold and silver. Back when premiums were high, I am sure that many potential investors backed away from the market when they were faced with excessive premiums. Potential investors will now actually be able to buy physical gold and silver around the market prices. This is a much better environment for fostering mainstream demand to keep gold and silver moving higher.
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Perth Mint to Resume Gold & Silver Sales

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Today the Perth Mint announced that it will resume taking orders for gold and silver bullion coins on January 12, 2009. Sales of bullion products have been suspended since November 22, making this a very lengthy suspension for a major world Mint.

Notably, sales will be resumed for a “streamlined range” of gold and silver products. By limiting the number of products which will be offered, they expect to increase production volumes. Products which will be unavailable include fractional and non standard size bullion coins.

This is similar to measures taken by the United States Mint. For the past several months they have been focusing primarily on producing and selling (on an allocated basis) one ounce Gold Eagles and one ounce Silver Eagles. Recently, they announced the delay of all 2009 dated bullion products, except one ounce Gold and Silver Eagles.

Fractional gold coins have been favored by survivalists and investors with smaller budgets. Historically, the US Mint has offered gold in 1/2 ounce, 1/4 ounce, and 1/10 ounce sizes. As world mints hunker down to deal with ever escalating demand, these products might become a thing of the past.

Can the US Mint Handle Demand for the Ultra High Relief Gold Double Eagle?

For much of the year, the United States Mint has been touting the upcoming recreation of what they have called the “nation’s most beautiful coin.” Augustus Saint Gaudens’ design for the Ultra High Relief Gold Double Eagle will be recreated as a one ounce 24 karat gold coin available for sale to the public.

The Mint’s intention to recreate the coin was first announced this March, followed by an official unveiling in July, and a well publicized first striking in November. The US Mint intends to strike the coins throughout 2009 in quantities necessary to meet public demand. So far, coin collectors have responded enthusiastically to the upcoming offering. With the recent main stream attention on gold, there will likely be interest from the broader public as well. Is the United States Mint prepared to handle the potentially significant demand for the new gold coin?

This year the US Mint, as well as most other world mints, have had continuous problems procuring sufficient gold blanks to meet the incredible demand for bullion coins. The US Mint in particular has been forced to suspend sales of some gold bullion offerings and continues to distribute coins though an allocation program since they are unable to meet the full demand.

Next year the US Mint will be at odds with itself as it struggles to meet growing demand for their regular bullion coins and new demand for a potentially hot collectible coin.

To estimate how much demand the new coin might generate, we can look at the US Mint’s 2006 release of the 24 karat American Buffalo Gold coin. Similar to next year’s offering, the coin design was taken from an old collector favorite, in this case the Buffalo Nickel. The coins were offered as one ounce bullion coins and one ounce collector proof coins. Sales of the coins began in late June 2006. In just over six months, the US Mint sold approximately 337,000 bullion coins and 252,000 proof coins for a total of 589,000 ounces worth of gold. Sales of the regular 2006 American Gold Eagle bullion coins totaled only 261,000 ounces.

Even if only the collectible versions of coins are considered, this represents a 50% increase in demand for gold coins. Since the US Mint has been unable to meet the full demand for regular gold bullion coins this year, the prospects that they can handle the additional demand for a popular collectible gold coin on top of already robust gold bullion coin demand seem remote.

Another aspect to consider is that the Ultra High Relief Gold Double Eagles are struck on specialized blanks. The coin will have a thickness of 4 millimeters which is more than 50% thicker than most one ounce gold bullion coins. So far the US Mint has been procuring these specialized blanks from Gold Corp., a wholly owned subsidiary of the Western Australian Government, who operate the competing Perth Mint. Notably, the Perth Mint recently announced that they would be forced to cease taking orders for precious metals until January 2009 due to “unprecedented demand.” So, not only will the US Mint need to procure a large amount highly specialized blanks from an already tight market, they will need to procure them from a competitor struggling to meet their own demand.

Taken together these factors do not bode well for a smooth release of this “recreated materpiece.” I envision a frustrating series back orders, delays, and eventual order limitations for the new coin. The US Mint intended the Ultra High Relief Gold Coin to be “a prestigous example of the highest level of artistic excellence in American coin design.” Instead they might just end up with another gold related headache.

Perth Mint Suspends Gold Sales

Another major Mint has succumbed to the unrelenting demand for physical precious metals. Today the Perth Mint announced that they will be forced to cease taking orders until January.

Although the Perth Mint is based in Australia, they do approximately 80% of their business outside of Australia in North America, Europe, and Asia. Demand for their products was also likely seeing a boost due to suspensions and rationing programs implemented by the US Mint.

The Perth Mint has valiantly tried to keep up with demand. At the beginning of October, they hired more staff and added a third shift to keep up with increased demand. After running at capacity production, seven days a week, 24 hours a day for the past several months, they were finally forced to suspend taking orders.

On the same day, the price of gold surged $43.10 or 5.8%, and briefly traded above the $800 level. News reports mainly attributed the gains to “return of safe-haven investment demand” and “gloomy economic forecasts.” More so, I think the physical gold market is sending strong signals to the paper market that are becoming increasingly difficult to ignore.  I think huge daily gains in the price gold will start to become increasingly common as the retail level stampede into gold continues.