Gold Is Getting Hot!

Gold Is Getting Hot!!
Royal Mint cashes in as gold market coins it

By Chris Flood in London and Gregory Meyer in New York

Published: November 19 2009 20:38 | Last updated: November 19 2009 20:38

The Royal Mint has dramatically ramped up production of gold coins as demand for the precious metal continues to surge.

Production more than quad rupled to 32,735.8 ounces – just over one tonne – in the third quarter, from 7,500.2 ounces in the same period last year. The increase is even more striking considering that the third quarter of last year had seen increased demand for gold as a investment haven amid the financial crisis.

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Production in the first nine months of 2009 more than tripled to 100,391.3 ounces (3.1 tonnes). The data were obtained by Bloomberg under a Freedom of Information Act request.

“Business is very good,” said Sonia Hellwig, a director at JTS Partners, a leading European wholesaler of gold coins and bars.

“Last year was when the man in the street started to think about investing in gold. Attitudes have clearly changed since last autumn.”

Ms Hellwig said mints in Canada and South Africa had problems satisfying demand for coins in 2008 and that delivery delays of several months were common, which had been a source of frustration for dealers.

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Ms Hellwig said last year’s shortages had pushed wholesale premiums on 1 ounce gold coins up to 10-12 per cent but these had now dropped back to about 4-5 per cent. “Most mints can now deliver swiftly.”

The most popular gold coin produced by the Royal Mint is the 1 ounce Britannia.

It has also produced a number of commemorative coins this year, including the Darwin £2, Mini £1 and 2009 Sovereign Collection.

Analysts warned about using the UK Mint production figures as a proxy for UK demand, noting that coins were shipped to the US market, where there is a shortage of bullion coins. The US Mint is currently seeing the strongest demand in a decade for gold coins.

Gold demand up 10% in Q3 – WGC 0 COMMENTS | ADD A COMMENTPRINTEMAIL | By:Liezel Hill 19th November 2009
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TORONTO (miningweekly.com) – Total identifiable demand for gold in the third quarter reached 800,3 t, or $24,7-billion in dollar terms, the World Gold Council (WGC) reported on Thursday.

Demand was up 10% compared with the second quarter, but 34% lower than in the same period last year, which was when investment demand for the metal surged as a response to the deepening global financial crisis at the time.

This year, gold's long-term store of value and wealth preservation qualities continued to attract investors and consumers during the September quarter, the WGC said in its quarterly demand trends report.

The organisation also compared the third-quarter figures against the five-year third-quarter demand average to 2007. On that basis, tonnage declined just 4%.

Compared with the second quarter, exchange-traded funds and inferred investment fell slightly quarter on quarter, while jewellery, industrial and retail investment demand recorded improvements.

“This quarter’s demand trends demonstrate the diverse and robust nature of the gold market which underpins the gold price,” commented WGCAram Shishmanian.

“Early signs of economic recovery and improving consumer confidence have seen jewellery and industrial demand rise relative to last quarter, and the profit taking witnessed earlier in the year has markedly decreased.”

The outlook for investment is generally positive, with demand levels likely to be well supported by economic and currency uncertainty, inflation concerns and the investors' desire to diversify portfolios, Shishmanian said.

“In the official sector, we expect to see a continuing trend of central banks diversifying their dollar exposure in favour of the proven store of value represented by gold.”

During the third quarter, gold prices averaged $960/oz, up 10% in dollar terms from the same period in 2008.

Jewellery demand was up 17% quarter on quarter, due in part to seasonal factors, but the high prices, especially in local currencies, resulted in a 30% drop in jewellery demand compared with a year earlier.

Identifiable investment demand, which includes gold exchange traded funds and bars and coins, was 227,2 t, a slight increase on second-quarter levels, but down 46% from the “extreme highs” of the third quarter of 2008, the WGC said.

Flows into gold ETFs remained strong in absolute terms at 41,4 t, but were again significantly lower than the relatively high figures recorded a year ago.

The total supply of gold contracted slightly in the third quarter at 833 t, 8% lower than the second quarter and 5% below year earlier levels.

However, mine production showed a “firm improvement” during the quarter, reaching 670 t.

“The key factors weighing on supply were an increase in producer dehedging and a negative contribution from the official sector, in addition to lower levels of scrap than previous quarters, the WGC said.

Gold was trading at around $1 144/oz on Thursday afternoon. The metal set a new record at $1 153,40 on Wednesday.