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    Bullion Sales “Exploding” Across the Pond

    Posted on May 30, 2017

    On the western side of the Atlantic Ocean, the United States Mint has spent the better part of the last five years running the coining presses at its West Point Mint facility around the clock to keep up with demand for the American Eagle Series of bullion and proof coins. The American Silver Eagle coin, in particular, has driven the need for continuous production of silver bullion coins at the mint. For example, from 1986 until the onset of the Great Recession in 2008, the US Mint struck and sold some 155.1 million Silver Eagle bullion coins over the course of 22 years.

    During the past 9 years of coining, the United States Mint has struck and sold an astonishing 330.78 million American Silver Eagle coins. This significant uptick in coining occurred amidst a wave of political and economic uncertainty during the Great Recession. Now, the Royal Mint in the UK is experiencing a similar explosion in bullion sales as Europe faces a period of political and social turmoil.

    Running Machines through the Night

    The Royal Mint is an 1,100-year-old institution that began life as the London Mint, a singular institution that opened its doors in 886 during the reign of Alfred the Great. At the time it was just one of many mints in the kingdom, and by 1279 it had moved to the Tower of London. By the 16th century, it achieved a position as the official mint of the United Kingdom.

    Since the 1960s, the bulk of the Royal Mint’s production has taken place at a facility roughly a dozen miles outside of Cardiff, Wales. In the midst of a protracted Brexit process, a wave of immigration on the European continent, and general concerns over social and political courses, gold and silver bullion sales are skyrocketing at the Royal Mint’s Cardiff facility.

    Chris Howard, direct of bullion at the Royal Mint, reports that the mint is producing 50% more gold bullion coins and bars at this point in 2017 than it was at the same time in 2016. Sales for the month of January alone rose by a third. For the Royal Mint, this means a transition in purpose.

    The rise of cashless economies throughout the developed world has cut into the core minting business of the Royal Mint, namely the production of British pounds and other sovereign currency. Howard sees the rising demand for gold and silver bullion as an opportunity for the Royal Mint to flex its muscle in growing the bullion arm of its operations.

    Production of silver and gold bullion coins at the Royal Mint used to have a near-invisible impact on the mint’s bottom line. That business arm has grown however, from negligible in its impact in 2012 to more than a quarter of its income in 2016. What used to ship out by the box is now shipping out by the pallet.

    Booming Bullion

    The Royal Mint’s core business remains, for now, the production of commemorative coins and legal tender currency. In addition to its extensive work at the moment on the all-new 12-sided British pound, the Royal Mint produced legal tender currency for 60 different countries as well.

    Bullion production is where the excitement is at the Royal Mint right now. Make no mistake, the Royal Mint has a long way to go in catching up with major players in the bullion market. The United States Mint churned out 1.2 million ounces of American Gold Eagles and American Gold Buffalos sold in 2016. The Austrian Mint produced 534,000 ounces of Austrian Gold Philharmonic coins last year, while the Perth Mint struck and sold 520,000 ounces of gold coins.

    However, the Royal Mint’s total of 237,000 ounces of gold last year represented significant growth for its bullion arm. That figure for 2016 marked an expansion of both revenue and profit for the Royal Mint as well, expanding by two-thirds in 2016 compared to 2015.

    Roughly 30% of the Royal Mint’s gold bullion sales come from direct sales on the Mint’s website. The other 70% of sales go through wholesale clients, such as JM Bullion. The United States and Germany are seen as the two major, core markets for Royal Mint gold bullion sales, which are powered both by gold bars (ranging in size from 1 Gram to 1 Kilogram) and the popular British Gold Britannia and gold sovereign programs.

    The Royal Mint is forecasting similar growth in 2017, with much of that focus on sales again coming from buyers in the United States and Germany.

    All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.