DJ Perth Mint Mulls Expansion as Gold Coin Sales Rebound
By Rhiannon Hoyle
PERTH, Australia--Factory presses at Australia's The Perth Mint have been
running round-the-clock as a steadying of precious-metal prices kindles demand
from mom-and-pop investors globally.
With gold and silver coins selling out as fast as they can be produced,
executives at the Mint, which refines the majority of gold mined in Australia,
say they likely have only one choice: expand.
Plans to install new coin presses are in their infancy, and no deadline for a
decision has been set. Still, an expansion would help cement The Perth Mint's
status as one of the world's biggest producers of gold coins, rivaling
countries like Turkey and the U.S.
"We're desperately trying to keep up with production," said Ron Currie, the
Mint's sales and marketing director. "We sold out of 1-ounce lunar silver
coins, that's 300,000 coins, in just over a month. Our 30,000 gold lunar coins
also sold out in a month."
It wouldn't be the first time the Mint has increased the scale of its
operations to meet demand from buyers as far away as Arizona in the U.S. and
southern Germany. Its operations in Perth, capital of Western Australia state,
have the capacity to produce 5-6 million coins a year, up from 1-2 million
coins five years ago.
The Mint-which opened in 1899 as a branch of Britain's Royal Mint, and is the
only one established here during the early gold rushes that still
operates-produces a range of bullion coins, including an annual lunar series
inspired by the Chinese zodiac. Its most popular series: Australian species
like the kangaroo, koala and platypus.
Coin sales have jumped in recent weeks, not just in Australia but around the
world. U.S. Mint gold-coin sales are set to exceed last year's totals after
worries about the stability of the federal government attracted buyers back to
the market, analysts said. Demand for classic American Eagles-the most popular
gold coin in the U.S.-nearly quadrupled in October compared to September
volumes, according to the U.S. Mint.
At The Perth Mint, gold coin sales were two-thirds higher in October compared
with three months earlier. The Mint refines more than 300 metric tons, or 10
million ounces, of gold a year using material mined at home and in countries
like Papua New Guinea, Indonesia, Fiji and the Solomon Islands. Sales of silver
coins-cheaper than gold pieces-were also up nearly one-fifth.
Mr. Currie said purchases appeared to be supported by speculation that metal
prices may have reached a nadir. "With the slight increase in price of late,
some people are starting to think that it has bottomed and will now climb
again," he said.
Spot gold is trading around US$1,315 a troy ounce, up 11% on its three-year
low in June. HSBC analyst James Steel said prices are likely to be influenced
most greatly by U.S. economic data and the direction of the greenback, with
which the U.S.-dollar-denominated commodity tends to share an inverse
correlation. He said signs of a continued rebound in the world's No. 1 economy
could drag prices back down to the US$1,300-an-ounce level.
Still, Mr. Currie said coin demand is generally underpinned by less-fickle
gold enthusiasts, who tend to buy the items as a long-term investment.
Germany is The Perth Mint's largest market for coins as an investment,
although demand from Asia is slowly rising and could quicken in future if
countries like India and China ease restrictions on imports, Mr. Currie said.
"We have been told we are already the largest importer into China, in terms
of a foreign mint," he said. "Sales are gradually increasing, but China for us
is a long game."
Mint executives wouldn't provide details on how much additional production
they are considering. It could depend on how quickly they can source machinery,
Mr. Currie said.
"We're looking at that at the moment, but there is no quick fix," said Mr.
Currie. "Buying new machinery takes time-it can take up a year for some of the
machinery to be built and then we have to find the space to put it in."
For now, the Mint's factory floor will likely continue to run at full
capacity: three shifts each weekday, meaning workers are on-site pressing and
carefully examining coins around the clock during the working week, and two
shifts at the weekend. Usually, the Mint would run just two shifts weekdays,
and only bring in workers at the weekend as required.
-Write to Rhiannon Hoyle at
rhiannon.hoyle@wsj.com
