Perth Mint: A Glimpse into the Future of Bullion Coins
Perth Mint products enjoy a reputation for excellence worldwide. Regardless of whether the coin is a limited edition intended for discerning collectors or the Australian Silver Kangaroo which is designed for investors and has an annual issuance in the millions, the quality is immediately apparent to anyone picking up the coin. Precious metal dealers and investors trust their quality, making Perth Mint products easy to trade for maximum price.
What Does The Perth Mint Do?
The Perth Mint is responsible for production of Australia’s precious metal coins including silver, gold, and platinum. Their counterpart, the Royal Australian Mint, produces the nation’s base metal coins for circulation. Perth is the older of the two mints. It was founded during the Imperial Era to produce gold Sovereigns for the British empire from Australia’s abundant gold stocks.
The organization’s founding may have been more than a century ago, but that history and has not kept the Mint from innovating. Perth is among the world’s most prolific mints in terms of new and interesting coin designs.
Officials there have also been quick to adopt the latest technology. The Perth Mint announced in early 2018 that it would begin development of a cryptocurrency. The digital tokens will be backed by physical bullion stored in the Mint’s vaults. Here is a look at where the Perth Mint has been and where it is headed.
Perth Mint History
The government of Western Australia was granted control of the Perth Mint in 1970. The operation spent the first 74 years under the jurisdiction of Britain’s Royal Mint.
Construction began in 1896 when Sir John Forrest laid the foundation stone. Australia gained its independence from Great Britain shortly afterwards. However, the production of the nation’s coinage remained with the Royal Mint for decades.
During that time, officials built a reputation for quality and extraordinary capability. In 1957 Perth produced a 13-oz gold plate with “six nines” (99.9999) purity - “arguably the purest of all gold” to have ever been refined.
In 1987, the Perth Mint launched the Australian Nugget Gold Coin series. Demand far exceeded any expectations with 155,000 ounces of gold traded on the first day. At the time, the trading volume was worth a little over $103 million AUD.
By the year 2000, the Perth Mint had produced 4,500 metric tons of gold. This was equivalent to 3.25% of all gold ever produced in the world. Not bad for a relatively small mint with humble beginnings.
Perth made headlines when it struck the world’s most valuable gold coin in October of 2011. The coin is 31 inches in diameter, 4.7 inches thick, and weighs an astounding 2,231 pounds (1000 kg) of pure 99.99% gold. Its value at the time of crafting was $53.5 million AUD.
It is the only mint to strike platinum bullion coins in three different designs; the Platinum Koala (1988-2008), the Platypus (2011 - 2017) and the Kangaroo (2018 - ). The US, Austria, Canada, and UK Mints have produced just one design each.
In early 2018, the Perth Mint announcement plans to release a blockchain-based cryptocurrency backed by its own bullion - a form of digital gold which can be easily used to make payments or as an investment. The initial release date is expected to be anywhere between January and June of 2019.
The effort is particularly interesting because it is driven by a government-run mint in a time when many governments are showing opposition to cryptocurrency. The chief executive of the Perth Mint, Richard Hayes, said Perth intends to entice investors to once again trade in precious metals.
He worries the recent boom of cryptocurrencies has the potential to overshadow the precious metals markets unless innovation keeps pace. Others argue that physical gold and silver have unique properties that a digital token can never replace. A token which can deliver characteristics of the trustless and decentralized blockchain, but is backed by physical metal has plenty of potential.
The price volatility of cryptocurrencies is a major barrier to widespread adoption as a currency. Businesses are reluctant to accept a token in payment, if it might be worth far less the following day. Conversely, clients are reluctant to spend tokens if they may soon be worth far more.
This is where their plan to mix technology and digital trading with tangible metal backing becomes attractive. If the token is redeemable in gold, the price of the token will be tethered to the lower-volatility gold price.
Only time will tell if buyers of physical gold bullion will readily purchase a digital token instead. Gold coins and bars, including those produced by the Perth Mint, are beautiful to hold – something token holder will have to forego. And physical metal offers zero counter party risk. Gold is impervious to power outages, internet outages and software vulnerabilities.
The Perth Mint is a leader in development of new designs and features, built in security marks, and other innovations. This includes the Mint’s attempt to launch a gold-backed cryptocurrency.
The potential crypto-gold product from the Perth Mint promised the ease of digital transactions with a value anchored to tangible gold bars. The offering could expand digital trading and investing in the gold markets. But it will almost certainly not put an end to the Mint’s 100-year history of delivering beautiful bullion products to expanding world markets for coins and bars.
There is no substitute for an investment in physical gold and silver held in the investor’s personal possession.