Mints can barely keep up with demand for gold coins

High inflation and ongoing geopolitical uncertainty are causing a flight to precious metals. Several mints are now running at full speed to meet the demand for gold and silver coins. The Austrian Mint can even keep up with the demand No more tracking. According to the director of the mint, Gerhard Starsich, the demand for the gold Philharmoniker coins has not been as high as this year since 1989. This year even surpasses the corona crisis of 2020, when precious metals were also in short supply.

"Currently, every gold coin that is minted has already been sold. In fact, we could sell three times as many coins as we can produce", says Starsich. At the mint's shop, people of different ages and origins have been queuing for months to buy gold and silver coins, Reuters writes in a short report. The golden Philharmoniker is currently the most popular gold coin in Europe and Japan, according to the Austrian mint.

'Accumulation of crises'

According to Starsich, the run on precious metals is the result of an accumulation of crises. "It started with the corona crisis, with the pandemic, when people were restless. Then Russia invaded Ukraine in February. That, in turn, boosted sales. Then came rising inflation in the summer and fall, which boosted sales a little further." In a financially conservative country like Austria, the public seeks refuge in the safety of cash and precious metals in times of crisis.

Austria's central bank, which owns the mint where the Philharmoniker coins are minted, said in a presentation on the financial position of households in October that Austrians have bought more gold in the 2.5 years since the start of the coronavirus pandemic than in the five years before. Sales figures in the first half of this year were even higher than in the first half of 2020, when the corona crisis was just starting.

This increase corresponds to the sales figures of Holland Gold. We also sold more precious metals this year than in 2020, the year of the corona crisis. In fact, October of this year was our best month ever, better than any month in the corona year 2020. Paul Buitink, managing directly from Holland Gold, sees the same trend as the Austrian mint:

"Since the start of the war in Ukraine, the demand for precious metals has increased sharply and remained at a substantially higher level. High inflation and concerns about the energy crisis in Europe saw demand rise to record highs in October. As long as savings rates remain low and inflation remains high, we expect this trend to continue."

Mints are running at full speed

It's not just the Austrian mint that is seeing a flight to precious metals. Other mints have also seen more investment coins roll off the production line in recent months. For example, the Australian Perth Mint sold a record amount of more than 1000 in October. 183,000 troy ounces gold coins and bars, double the number in the previous month and even three times as much as in October last year. The sale of Gold Coins was 2.5 times the average over the past ten years in October.

This year, the mint sold a total of 942,031 troy ounces of gold, an increase of 7.1% compared to the same period last year. The sale of Silver Coins And Baren is even 27.8% higher this year than last year at 15.83 million troy ounces. Neil Vance of the Perth Mint attributes these results to an increased demand for precious metals, especially in the United States and Germany:

"The spike continued throughout the month of October, resulting in our best month ever for the number of ounces sold in the form of coins and minted bars. Demand from customers in the U.S. and Germany was incredibly strong."

The Royal Canadian Mint, Canada's official mint, saw demand for golden Maple Leaf currencies in the third quarter compared to last year by 14% increase to 354,300 troy ounces. Demand for silver Maple Leafs remained virtually unchanged from the same period last year. Whether the Royal Canadian Mint also benefited from the peak in demand in October, we won't know until the mint publishes its fourth-quarter figures early next year.

Gold as a safe haven

Due to the combination of high inflation and still low savings rates, it is less interesting to leave a lot of money in the bank account. Traditional investments such as stocks such as bonds have also suffered significant losses this year. This makes it more attractive to keep part of the assets in precious metals, for diversification and as a hedge against a financial crisis. According to the director of the Austrian Mint, December is traditionally a good month, as people also buy gold coins as Christmas gifts for family or friends.

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On behalf of Holland Gold, Paul Buitink and Joris Beemsterboer interview various economists and experts in the field of macroeconomics. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here  to subscribe.