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The world’s major precious metals mints are currently riding high on the
back of huge global bullion coin demand and relatively buoyant gold and
silver prices. The sheer scale of revenues that the US Mint, Royal
Canadian Mint (RCM), Perth Mint
and Austrian Mint have
been generating over the last number of years is eye-opening. These mints are
predominantly run as commercial enterprises. Not surprisingly, due to their
high value nature, revenues from bullion coin sales account for the lion’s
share of total revenues for each institution and have been a core driver of
their overall profitability.
Official Bullion Coin Programs
Each of these four mints has an official bullion coin program. The US
Mint’s program consists of American Eagle Silver bullion coins, American
Eagle gold bullion coins, American Buffalo gold bullion coins, America the
Beautiful silver coins, and American Eagle Platinum coins. RCM's bullion coin
program comprises gold, silver, platinum and palladium Maple Leaf bullion
coins, as well as the recently added MapleGrams. The Perth Mint bullion
program is slightly more extensive and briefly consists of the following:
Australian Kangaroo gold and silver coin series, Australian Kookaburra silver
coin series, Australian Koala silver coin series, Australian Platypus
platinum coin series, Australian Lunar gold and Australian Lunar silver coin
series. The flagship of the Austrian Mint's bullion program is the Vienna
Philharmonic gold bullion coin series, but the mint also produces the Vienna
Philharmonic as a silver and platinum bullion coin, as well as historical
restrikes of original Austrian circulation gold ducats, gold guilders and
gold crowns.
Bullion Coin Sales Drive Revenues
In fiscal 2015 (to September 30), the US Mint generated revenues of
US$2.12 billion on its bullion coin sales. This represented 57.6% of the
Mint’s total 2015 revenues of US$ 3.69 billion. Revenues from gold Eagles
totalled $979.6 million, silver Eagle sales added $785.4 million, and gold
American Buffalos contributed another $252.2 million in revenues.
In 2015, the RCM’s Gold Maple Leaf coin sales generated revenues of
CA$1.41 billion while the Silver Maple Leaf coins added a further CA$687
million, giving a combined revenue of CA$2.1 billion. This represented over
80% of RCM’s total bullion revenues in 2015, and nearly 71% of RCM’s total
2015 group revenues.
 
The Austrian Mint’s annual report for 2015 is not out yet but will be
published in early July. For calendar 2014, the Austrian Mint generated
revenues of €1.14 billion. The biggest revenue contributors were gold
bullion coin sales of €464.2 million and gold bar sales of €391.7
million. Together the Austrian’s Mint’s gold coin and bar sales represented a
combined 75% of total mint revenues.
However, profit margins on the mints’ bullion coin sales are relatively
small. For example, in fiscal year 2015, the US Mint only generated bullion
income of $61.1 million on bullion revenue of $2.126 billion, so this was a
margin of 2.87%. Nevertheless, it’s important to remember that the bullion
sales of these mints, both in coins and bars, supply a global distribution
network of precious metals wholesalers, bullion dealers and banks on the
downstream side, as well as a chain of precious metals suppliers, refineries
and gold miners upstream. Not to forget the ultimate beneficiaries of bullion
sales, the investors and collectors. There is therefore an entire virtuous
ecosystem built around the bullion coin output of these giant precious metals
mints.
Furthermore, an often overlooked point is that with all four of these
mints, profits from operations can and often do go to the mints’ owners in
the form of either transfers or dividends. For three of the mints, their
owners are governments. For the Austrian Mint it is owned by a government
owned central bank, which is essentially the same thing.
Government Ownership and Dividends
The US Mint is part of the US Department of the Treasury, and reports to
the Office of the Treasurer. The Mint is structured as a Public Enterprise
Fund (PEF) under 31 U.S.C. § 5136 and generates its own revenues without the
need for Federal appropriations. Any revenue that the US Mint deems to be
excess to it’s needs is transferred to the Treasury General Fund.
For fiscal year 2015 (to September 30), the US Mint transferred $561
million to the Treasury General Fund, however $11 million of this was income
from numismatic / bullion products, as the rest was a seigniorage transfer from
the sale of circulating coins to the Federal Reserve Banks. But interesting,
this $11 million can actually be used to reduce the US Treasury’s budget
deficit.
The Royal Canadian Mint (RCM), a federal Crown corporation of the
Government of Canada, is 100% owned by the Canadian Government and reports to
the Canadian Department of Finance. Like the US Mint, the RCM is not funded
by the Government and is predominantly run as a commercial organization
except for the Canadian circulation coin program which since 2014 has been
operated on a non-profit basis. Although the RCM made a small loss in fiscal
2015 (its year end is December 31) due to a one off impairment, it still paid
dividends of CA$53 million to the Government of Canada which was a lot higher
than previous years due to strong Maple Leaf coin sales.
The Perth Mint, through a holding company called Gold Corporation, is 100%
owned by the Government of Western Australia. Western Australia is a state
within the Commonwealth of Australia. The Perth Mint group operates on a
fully commercial basis and is self-funding. In its fiscal 2015 results to
June 30, the Mint made a profit after tax of AU$14 million and also paid a
dividend of AU$10.54 million to the Government of Western Australia.
The Austrian Mint (Münze Österreich) is fully owned by Austria’s central
bank, the Oesterreichische Nationalbank (OeNB). The OeNB’s capital is itself
fully owned by the Austrian government. Although the Austrian Mint 2015
annual report is not yet published, the Austrian central bank has already
reported that for 2015, it received a regular dividend of a cool €89 million
from the Austrian Mint. In 2014, the Austrian Mint paid the central bank an
even bigger dividend of €184.8 million out of its net profit.
Silver - Gold Production Ratio
The relative importance of gold and silver bullion coin sales varies
across each mint and between years since each Mint’s bullion program differs,
and demand patterns ebb and flow.
In 2015, the US Mint sold 801,500 ounces (24.93 tonnes) of gold American
Eagles and 220,500 ounces (6.86 tonnes) of gold American Buffalos, for total
gold bullion coin sales of 1,022,000 ounces (31.79 tonnes). Silver American
Eagle sales reached 47 million ounces (1,461.85 tonnes) in 2015, with another
1,060,000 ounces (32.97 tonnes) of America the Beautiful 5 oz coins sold,
bringing total US Mint silver bullion coin sales to 48.06 million ounces
(1,494.82 tonnes).
Using a metric of silver ounces sold compared to gold ounces sold, this
gives a silver to gold coin sales ratio of 47:1 for the US Mint. In 2015, the
RCM sold 953,000 ounces of gold Maple Leaf bullion coins (29.6 tonnes), and
34.3 million ounces (1067 tonnes) of silver Maple Leaf bullion coins, giving
a silver to gold coin sales ratio of 36 for the RCM. Therefore applied to
2015, it is justifiable for the US Mint to say that it was the world’s
largest seller of gold bullion coins and silver bullion coins.
Although the Austrian Mint hasn’t published its full 2015 bullion sales
statistics yet, it did reveal to Bloomberg earlier this year that its
combined gold coin and gold bars sales for 2015 totalled 1.32 million ounces
(41 tonnes), and its combined silver sales in 2015 totalled 7.3 million
ounces (227 tonnes). This would give a general silver to gold ratio for the
Austrian Mint of only 5.53, which highlights the Austrian Mint’s relative
concentration on gold bullion over silver bullion.
In 2014, the Austrian Mint sold 483,700 ounces (15 tonnes) of gold coins,
mainly Vienna Philharmonics, and 410,364 ounces of gold bars (12.75
tonnes), Total gold sold was therefore 894,000 ounces (27.75 tonnes). The
Mint’s silver coin sales approximated 144.4 tonnes of silver in 2014.
This would give a silver to gold coin ratio of 9.63 and a silver coin to
total gold (coins and bars) ratio of 5.2.
Overall, the world’s largest mints are a useful source of income for their
government owners. More importantly though, these Mints actually make the
valuable and high quality investment gold and silver coins and bars that are
in such high demand right now, and that also provide tangible economic
benefits such as employing large numbers of people around the world in highly
skilled jobs.
To learn more about the world's top Mints, please see full profiles of
these Mints which have now been published on BullionStar's Gold
University pages:
United States Mint: http://www.bullionstar.com/gold-university/un...ted-states-mint
Royal Canadian Mint: target="_blank";https://www.bullionstar.com/gold-university/roy...l-canadian-mint
Perth Mint:&n target="_blank"bsp;http://www.bullionstar.com/gold-university/perth-mint
Austrian Mint&n target="_blank"bsp;http://www.bullionstar.com/gold-univers...y/austrian-mint
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