Demand for gold remains strong
Demand for gold remains strong

This month's commodities rout has hit resources stocks but it has also turbocharged investors' appetite for gold, with demand from US buyers, in particular, propelling sales of coins into overdrive.

Coin sales at the US Mint - the world's biggest - have put it on track for its best month in a year, with 85,000 ounces of its American Eagle snapped up since May 1.

It's a similar story at the Perth Mint, where demand for both coins and bullion is hovering near record levels.

"It's been an extremely volatile couple of years and our business is growing dramatically, particularly in the US," Perth Mint sales and marketing director Ron Currie said.

The Perth Mint has sold more than 100,000 minted bars to US customers in less than 12 months, a figure Mr Currie says represents "huge" growth.

The increasing demand - Australian minted products are feted for their quality and the country's association with "sunshine and beaches", Mr Currie says - saw the mint increase production of coins and bullion to more than 30,500oz last month, compared to about 18,000oz for the same month last year.

And Mr Currie expects ongoing investor interest, with the Perth Mint's Lunar series - which has an annual mintage of 30,000 coins - expected to sell out within a month on its release in September, quicker than previous years.

Analysts have labelled the conditions a perfect storm for gold prices, with the fall in commodity prices coinciding with a weak US dollar and record-low interest rates in several major developed economies.

"There are more factors than at perhaps any other time in history that would suggest to investors they should own gold," Michael Haynes, chief executive officer of American Precious Metals Exchange, an online bullion dealer that had its three best sales weeks ever in April and May, said.

Gold closed at $US1493.17 in Sydney yesterday, a gain of about 5 per cent on its trading price at the start of the year.

Analysts expect the rally, which corresponds with a near-10 per cent fall in Standard & Poor's GSCI Index of 24 raw materials since May 1, to drive gold a further 17 per cent higher to a record $US1750/oz by the end of the year and further still next year.

If demand continues, the Perth Mint will be on track to surpass 2009-10's pre-tax profit of $18.7 million for 2009-10, the second-biggest result on record.

"We're investing a lot in new machinery to try to get our production up higher (to meet demand), so that says it all really," Mr Currie said. <div class="endnote">

With Bloomberg </div>

The West Australian

Popular videos

Compare & Save

Compare & Save

Follow Us

More from The West