Bullion supply remains strong despite ongoing challenges faced by mints
By Michael Pinson, News Editor
09 Jun 2020
Precious metal demand has grown to record levels in the past few months, as investors turn to gold and silver for a safe haven to protect their wealth. This had led to a unique situation for many mints and refiners, with demand booming and a challenging supply situation. Despite these challenges however, some of the world’s renowned mints have kept up with demand, and seen sales grow significantly as a result.
Demand for silver is now growing particularly fast. It is currently leading the climb as measured against gold. The gold/silver ratio, which compares how many ounces of silver will buy an ounce of gold, recently dipped below 100, but is still seen by many to indicate silver is undervalued.
The pressure is therefore on mints to answer the demand for precious metals. With social distancing, transport restrictions and the health of their employees to consider however, this has not been an easy time for mints and refineries.
The Royal Canadian Mint recently announced financial results for the first quarter of 2020. Marie Lemay, President and CEO of the Royal Canadian Mint said that because of coronavirus they have, 'adapted our production to be able to continue delivering critical services in support of essential sectors of the Canadian economy, while adhering to strict new protocols to ensure our work environment is a safe one.'
Royal Canadian Mint, Ottawa
This strategy enabled the Canadian Mint to continue producing its popular gold and silver Maple coins during the early weeks of the pandemic. Though down on last year's first quarter, it still recorded a consolidated profit before income tax and other items of CA$6.5 million, and this only included the very beginning of the coronavirus pandemic.
The increase in demand for precious metals globally saw the mint’s gold sales increase by 60% on Q1 2019. Silver sales were also up by 16% on Q1, with the Canadian Mint’s silver exports generally strong already thanks to its popular silver Maple coin.
The mint has already laid out further plans to split shifts and introduce further safety measures that will see their facilities able to return to full production for Q2 onward.
As reported in May, Australia’s Perth Mint also performed well during this crisis. Perth Mint has kept up production throughout and saw a sales increase of 134%.
Swiss refineries, dominated by Heraeus and PAMP, have experienced major changes in their business, and severe lockdowns resulted in temporary closure of their facilities. These have since been able to resume limited capacity production as they move to meet the continuing demand for their products.
Together, Swiss refiners process about 1,500 tonnes of gold a year, equivalent to a third of all global supply. Their traditional markets of India and China have fallen, but this has been replaced by increased demand from the US and Europe, particularly Germany.
Swiss gold exports to the US leapt to 111.7 tons in April. This is the biggest monthly total on record. The US typically imports less than a single ton of gold per month from Switzerland.
In the UK, the Royal Mint – under its new Non-Executive Chair, Graham Love – turned over part of its operation in Llantrisant to the production of medical visors for the NHS. Nevertheless, the Mint saw sales of its physical bullion coins and bars up 487% on that of April and May in the year before. Its core products – the Britannia and Sovereign – have both been exceptionally popular with investors.
Mints will have further challenges to come as the world adjusts to the “new normal” for businesses. With precious metal demand expected to only grow in the face of the global recession, the mints that can meet this demand will see themselves in a strong position through 2020 and beyond.