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Perth Mint Stands Shoulders Above the Rest

Much water has passed under the bridge since the Perth Mint opened its doors in June 1899. Owned in its entirety by the Government of Western Australia, the Perth Mint is popular for the manufacture and distribution of precious metals products for investors and collectors across the globe.

Since the creation of Perth Mint, the gold market has undergone seismic shifts. Not only that, but the relationship between the UK and Australia has had to adapt, as both countries navigated the choppy economic waters of the 20th century and the early 21st century.

As the UK prepares for a future outside the European Union, the likes of the Perth Mint offer a tangible bridge between us and our cousins Down Under, as we continue to invest in precious metals over the coming years.

The history of Perth Mint

The story of the Perth Mint begins with a gold rush in the city of Kalgoorlie and a small town called Coolgardie in Western Australia. In the early-20th century, the British Empire spanned far and wide, with its Royal Mint having three distinct branches based in Australia, which was then a dominion of the Empire.

The discovery of gold in Kalgoorlie and Coolgardie required the opening of a special Perth-based branch, to facilitate the refining of the gold found nearby. Between the years 1899 and 1931, the Perth Mint estimates that it refined and produced at least 106 million Gold Sovereign coins. These items have since entered into legend as some of the most valuable items to be struck in gold.

Despite the many decades that have passed since that late-Victorian gold rush in Western Australia, Gold Sovereigns remain legal tender in Britain - the only issue is circulation. In 1917, with World War One raging and the necessity for raw materials spiking, gold coin production fell to such a low ebb that Sovereigns fell out of circulation entirely.

The Perth Mint’s original set of Gold Sovereigns extended from the final years of Queen Victoria’s reign, up until the later years of her grandson, King George V, with some of the last examples minted in 1931. Minted in 22-carat gold, these coins were a snapshot of a period lost to the mists of time, but preserved by being struck in one of nature’s most durable and precious metals - gold.

Australia’s rich seams bear fruit

Australia is one of the most ideal places on the planet to find gold. Formed over millions of years beneath the Earth’s crust, it is estimated that Australia is home to 17 per cent of the world’s gold, equivalent to 9,500 tonnes. Up to 60 per cent of the gold in Australia comes from Western Australia alone, giving the Perth Mint plenty of minting to be doing for a considerable amount of time to come.

While the supply of Gold Sovereigns produced by the Perth Mint ran dry in 1931, that hasn’t stopped them from producing some of the world’s purest bullion items available for purchase. In 1957, the Perth Mint laid claim to having produced some of the world’s purest gold ever, with one proof plate giving a purity of 999.999 parts of gold per thousand.

In July 1970, the winds of change were in the air, as the Government of Western Australia took ownership of the Perth Mint. This couldn’t have come at a better time, as the precious metals market was gearing up for one of the most explosive price rallies it had ever seen.

At present, Australia is in a privileged position as one of the world’s top three largest gold producers, behind China and Russia. The 2019-20 financial year saw production soar to a record 328 tonnes of gold, worth a record $25 billion in total. The skies are still the limit for the potential of Australia’s gold market, despite the fact that gold is one of the rarest of all the world’s precious metals.

Close ties in challenging times

It’s an understatement to say that the last few years have been challenging for the UK. In the post-war era, the country dismantled its empire while seeking to integrate closely with its European neighbours. However, the UK’s political goodwill towards Europe began to wane over the years - what started as a desire to join the European Community (EC) in the 1960s and 1970s turned into a growing cynicism about the growing power of the European project.

Euroscepticism exists in all European countries, but the British strain proved to be one of the most durable and co-ordinated. The UK’s slow journey away from integration with Europe arguably began with the repeated rejections towards its requests to join the EC during the era of Charles de Gaulle. These humiliations stung on some level, and by the 1990s, Eurosceptics grew uneasy about the prospect of an increasingly-integrated economic bloc.

The creation of a prospective shared currency and the loss of control over interest rates were some of the factors which led to a schism within the UK Conservative Party, leading to a number of dramatic developments, including Black Wednesday and ultimately, the EU referendum and Brexit itself. Both Black Wednesday and Brexit saw the pound lose a significant chunk of its value, as the UK inched that bit further away from integration with Europe.

In the meantime, our Anglosphere cousins have been thriving, through embracing new technologies and ideally-placed trading partners with whom they could share their exports. Australia, for example, has built itself up as one of the world’s greatest commodity exporters, fuelling China’s great economic boom of the last few decades.

Alas, the great Chinese boom has waned, reducing demand for Australian exports, just as Britain is turning its attention beyond Europe. British investors are looking for the next great venture, and the boom in gold prices shows no sign of abating just yet.

Meanwhile, Australia has a language and a shared history in common with Britain - an Australian referendum in 1999 affirmed the country’s desire to keep Queen Elizabeth II as the head of state, and there are few indications of any change to this state of affairs, at least for the coming years ahead.

Gold rushes of the past

The relationship many of us have with physical gold has changed much over the last century. When the Great Depression was at its height in the 1933, gold was actually confiscated by law over in the United States, when Executive Order 6102 entered into force. In 1944, the Bretton Woods system was established, tying the value of the US dollar to a fixed unit of gold. For years, gold prices remained static at about $35 per troy ounce.

However, as countries started to devalue and sell gold reserves in order to stay competitive, pressure grew to abandon the system entirely. By 1971, inflation was starting to become rampant, prompting the US to scrap the gold standard entirely. As a result, the US dollar became a fiat currency, whereby its value was determined based on the amount of dollars in circulation.

This gave gold the trigger it needed for an explosive price rally. Gold remained out of reach for the typical investor in the US until December 1974, when Executive order 6102 was lifted. By this time, gold had started to appreciate in value, as the stagflation crisis began to rampage through industrialised economies. Confidence in the US dollar waned during the 1970s, as inflation ate into pay packets, and gold rose to new all-time highs.

In the meantime, the Perth Mint was sitting on a literal goldmine, with an asset that was becoming increasingly desired and valuable by the day. A bubble in prices led to a bursting of the 1970s gold bull market in 1980, but the yellow metal was able to retain enough value to remain a safe store of wealth for many years after the peak.

The Perth Mint came under new management in 1987, when a State Act of Parliament in Australia led to the creation of the Gold Corporation, which would now oversee the Mint and its operations. The Gold Corporation was authorised to use the Mint to help produce and market gold, silver and platinum as legal tender coinage for investors and collectors in both Australia and all over the world.

The Perth Mint - top of its game

The new millennium heralded the start of a new bull market in gold, and the Perth Mint has continued to produce quality coinage to the present day. In 2011, the Perth Mint produced one of the world’s single largest gold coins. Measuring 80cm in diameter and 12cm thick, this one-tonne coin became the world’s heaviest gold coin, at 99.99 per cent purity.

The coin had a face value of A$1 million, but the gold from which it had been struck had an actual value closer to A$50 million.

As of 2020, the price of gold has continued to climb. In the UK, gold is now worth almost £1,500 per troy ounce, having effectively doubled over five years. Various factors, including a slowing Chinese economy, Brexit shocks and other issues have led to the pound losing value over time, while the price of gold itself has enjoyed its own price rallies. This means that the gains seen in pound-denominated bullion are more significant than those in US Dollar terms.

As the UK looks ahead to a future on the edge of Europe, investors look for certainty amidst a sea of unease. Britain is no longer the beating heart of an empire, and neither is it a key player in the ever-closer union developing between nations in Europe. What we lack in those areas could be made up for in the bonds shared between the UK and Australia.

Both countries are still some of the wealthiest in the world, sharing a language and much of their history. Not only that, but the Perth Mint is a link the two countries share, as a means to allow both Brits and their Australian cousins to invest in precious metals such as gold and silver. To this day, the coins produced from Perth Mint are still considered legal tender, but their ever-increasing value makes them far better for investment purposes.

UK Bullion looks forward to providing its customers with the latest in the Perth Mint’s collection of gold coins over the coming years, helping you find a suitable item to consider adding to your portfolio today. Call us on 01902 623 256 to learn more about our range of Perth Mint coins and other bullion items today.

We are proud to be Authorised Distributors of Perth Mint products, please click here to see the range.