by Jan Harvey of Reuters
In a warehouse a dozen miles to the northwest of Cardiff, the Royal Mint is running its machines through the night to keep up with demand for one of the big beneficiaries of the last year’s political turmoil – gold and silver bullion.
Gold Sovereigns
The 1,100-year-old Mint, based here since the 1960s, is producing 50 percent more gold bullion coins and bars than it was this time last year, director of bullion Chris Howard says, while its sales in January rose by a third.
With growth prospects for its core minting business limited by the advent of the cashless society, the Mint has focused heavily on growing its bullion arm in the last few years.
Its contribution to the overall business’s bottom line has gone from negligible levels in 2012 to more than a quarter in the last year.
“We used to send these out by the box,” head of bullion sales Nick Bowkett says, indicating stacks of silver coins packed for transit in the Mint’s bullion striking room. “Now we ship them out by the pallet.”
Next door, the Mint’s core business — producing commemorative coins and legal tender for 60 different countries — is churning out crates of coinage, including the new 12-sided British pound, due to launch in March.
But it’s the bullion arm that is really ramping up.
While in global terms the Mint is still small — its total gold sales of 237,000 ounces last year were dwarfed by the U.S. Mint’s 1.2 million ounces of gold Eagle and Buffalo coin sales, the Austrian Mint’s 534,000 ounces of gold Philharmonic coin sales, and the Perth Mint’s 520,000 ounces of gold sales — its bullion unit expanded both revenue and profit by two-thirds last year.
It is forecasting similar growth this year, through expansion in its already core U.S. and German markets, and elsewhere.
About 30 percent of its bullion sales – largely Britannia gold coins, but also sovereigns, and bars ranging in size from 1 gram to 1 kilogram – are made through the Mint’s website, while a further 70 percent goes to wholesale clients.
RETAIL GOLD BULLION EXPLOSION
Global retail investment in gold has exploded in the last 15 years. At nearly 1,000 tonnes last year, it was two and a half times the levels seen in 2001.
While a sharp rise in investors selling gold back onto the market after prices surged last year weighed on the net demand figure, gold sales in Europe jumped after the Britain’s Brexit vote and resulting fluctuations in the currency markets.
The government-owned Mint’s sales to Germany more than doubled last year in volume terms, while UK sales rose by more than a quarter.
“The excitement around Brexit, and the uncertainty, brought a lot more (business), especially on to our ecommerce platform,” Howard, a veteran of designer retail brands such as Guess and Swarowski, said.
“The level of trading after Brexit was much higher than it was before, and it has continued to be at that level.”
Gold prices ( XAU ) rose for the first year since 2012 last year, by 10 percent, while in sterling terms ( XAUGBP ) gold performed even more strongly, climbing 30 percent.
The turmoil seen in stock markets this month after U.S. President Donald Trump took office and optimism over his plans for the U.S. economy dissipated suggests that investors will continue to need from risk.
News and Commentary
“Gold is likely succumbing to some funds taking profits” said GoldCore (MarketWatch.com)
Gold rises, set for biggest weekly gain since mid-April (Reuters.com)
ANZ says possibility of gold through $1300 if the political situation in US worsens (ForexLive.com)
Asia Stocks Fall as Caution Remains; Brazil Roiled (Bloomberg.com)
Gold snaps 6-session win streak as stocks rebound (MarketWatch.com)
WORLD SILVER SURVEY 2017 (SilverInstitute.org)
Will next market crash be like 2008 or 1973? (Mining.com)
Gorbachev Warns of Growing Danger (ConsortiumNews.com)
We face a complete collapse of the property market (TheSun.ie)
Goldman Says Swedish, Kiwi Housing Markets Most at Risk of Bust (Bloomberg.com)
Gold Prices (LBMA AM)
19 May: USD 1,251.85, GBP 962.17 & EUR 1,122.03 per ounce
18 May: USD 1,261.35, GBP 968.21 & EUR 1,133.95 per ounce
17 May: USD 1,244.60, GBP 961.70 & EUR 1,122.13 per ounce
16 May: USD 1,234.05, GBP 958.98 & EUR 1,117.93 per ounce
15 May: USD 1,231.50, GBP 952.32 & EUR 1,124.61 per ounce
12 May: USD 1,227.90, GBP 955.06 & EUR 1,129.55 per ounce
11 May: USD 1,221.00, GBP 945.66 & EUR 1,122.95 per ounce
Silver Prices (LBMA)
19 May: USD 16.77, GBP 12.90 & EUR 15.02 per ounce
18 May: USD 16.81, GBP 12.90 & EUR 15.10 per ounce
17 May: USD 16.90, GBP 13.03 & EUR 15.22 per ounce
16 May: USD 16.72, GBP 12.97 & EUR 15.13 per ounce
15 May: USD 16.59, GBP 12.83 & EUR 15.12 per ounce
12 May: USD 16.30, GBP 12.68 & EUR 14.99 per ounce
11 May: USD 16.37, GBP 12.70 & EUR 15.06 per ounce
