Gold Sales at Perth Mint Advance in October as Prices Tumble

Photographer: Ron D'Raine/Bloomberg

Gold cast bars are arranged for a photograph at the Perth Mint in Perth. Close

Gold cast bars are arranged for a photograph at the Perth Mint in Perth.

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Photographer: Ron D'Raine/Bloomberg

Gold cast bars are arranged for a photograph at the Perth Mint in Perth.

Gold sales from Australia’s Perth Mint, which refines most of the bullion from the second-largest producer, rose in October as a drop in prices to a three-month low spurred demand and the mint filled a backlog of orders.

Sales of coins and minted bars climbed 13 percent to 77,255 ounces last month from 68,488 ounces in September, according to data from the mint. While demand in October more than doubled from 30,430 ounces in August, sales were 31 percent lower than this year’s peak in April, when gold tumbled into a bear market.

Bullion is set to snap 12 years of gains as some investors lost faith in the metal as a store of value amid speculation the U.S. Federal Reserve will curb stimulus. Gold advanced 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system to boost the economy. While investors sold bullion at a record pace from exchange-traded products this year, sales of coins by the U.S. Mint have surpassed the total for all of 2012.

“There’d be people buying while the price is low,” said Ron Currie, the Perth Mint’s sales and marketing director. “We’re getting a lot more product out the door because of previous orders that we hadn’t been able to supply because of capacity,” he said.

Bullion for immediate delivery lost 21 percent this year to $1,320.19 an ounce at 4:59 p.m. in Singapore. Prices dropped to $1,251.85 on Oct. 15, the lowest since July 10. The Standard & Poor’s GSCI gauge of 24 commodities fell 5.6 percent since the start of January and the MSCI All-Country World Index of equities gained 17 percent.

Investor Sales

The U.S. Mint sold 755,500 ounces of American Eagle coins as of Nov. 1, compared with 753,000 ounces in all of 2012, according to data on the mint’s website. The mint sold 48,500 ounces in October from 13,000 in September and 11,500 in August, the lowest since July 2007. Coin sales last month were still 77 percent lower than in April, when they surged to a 40-month high of 209,500 ounces. The Perth Mint sold 112,575 ounces in April.

As bar and coins sales increased, demand waned for ETPs backed by the metal. Holdings tumbled 29 percent this year to 1,875.04 metric tons on Nov. 4, according to data compiled by Bloomberg. Assets have shrunk every month this year, the worst run on record.

Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc. who forecast this year’s rout, said Oct. 8 that gold is a “slam dunk” sell in 2014 and will decline as the U.S. economy improves. Bullion will extend losses into 2014 amid expectations that the Fed will reduce its $85 billion monthly bond-buying program, Morgan Stanley said last month.

Fed Stimulus

Fed policy makers unexpectedly refrained from slowing the asset purchases in September, and economists surveyed by Bloomberg Oct. 17-18 said that the central bank will probably maintain that level until March.

The Perth Mint, which began operations in 1899, is owned by the Western Australian government and refines between 300 tons and 400 tons each year, including mined and scrap gold, according to its website. Australia is the world’s biggest gold producer after China.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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