Mints coin it as consumers scramble for gold
Arizona Coin Collector
http://www.reuters.com/article/ousiv/idUSTRE52U06M20090331
Mints coin it as consumers scramble for gold
Mon Mar 30, 2009 9:27pm EDT
By Sarah Marsh and Jan Harvey
VIENNA/LONDON (Reuters) - In the heart of Vienna
in a Biedermeier building commissioned by Emperor
Franz I, a man wearing a khaki uniform and beret
exchanges a wad of euro notes across the counter
for a few sparkling gold coins.
Guenther Fuchssteiner, 59, is a military doctor
who for over 20 years has been coming to the
Austrian Mint and exchanging whatever spare money
he has for gold, following a habit established
by his parents.
"I have always tried to put a little bit of gold
aside, as an investment, and I have been doing so
more since the crisis," said Fuchssteiner.
A few years ago his visits to the Mint, which was
founded more than 800 years ago, might have seemed
eccentric.
No longer. From the Georgy Pobedonosets to the
American Eagle, gold coin production is being
cranked up in mints around the world to satisfy
customers believing the assets may be immune to
the global financial crisis.
Russia's state-controlled Sberbank says it has
never seen such strong demand for investment
coins, while the U.S. Mint says sales of its
one-ounce American Eagle gold bullion coins
rocketed over 400 percent to 710,000 ounces in
2008.
"The demand for gold and silver has been
unprecedented," said Carla Coolman, a spokeswoman
at the United States Mint.
Austria's Philharmonic, named after the Vienna
Philharmonic Orchestra, was the world's
best-selling gold coin in the last quarter and
sales soared 544 percent in the first two months
of 2009.
"There is no sign of demand abating," Austrian
Mint Marketing Director Kerry Tattersall told
Reuters, expecting sales this year to exceed
2008's record levels. "At present production is
struggling to keep up with demand."
Hans Dieter Rauch, who sells both collectors'
and investors' coins in his boutique on Graben,
one of Vienna's most exclusive shopping streets,
said revenues soared 300 percent last year.
"It's the man in the street, not particularly
rich people but normal citizens like you and me,"
said Rauch, 65, monitoring the fluctuating
price of gold on a screen in his back room.
Gold hit a record high of $1,030.80 an ounce in
March 2008 and last month rose back above
$1,000. Jewelry sales by cash-strapped Americans
and Europeans have helped brake the metal's rise
in recent weeks.
GOLD UNDER THE BED
The Czech Republic's Komercni Banka this month
added gold coins and bars to their traditional
portfolio of products. In New Zealand, Michael
O'Kane, head bullion trader at the Mint, said
the mint was averaging a month's transactions
in a day.
Wealthy investors are more likely to invest in
bars than coins as the premium for production
costs is lower, said Wolfgang Wrzesniok-Rossbach,
head of sales at precious metals group Heraeus.
"If you buy a kilo bar you have to pay one time
the surcharge for producing the bar, which is
pretty low," he said. "If you buy thirty one-ounce
coins, which would be about equal to a one-kilo
bar, you have to pay thirty times that amount."
But coins have the edge for small investors who
want flexibility, and appreciate their aesthetic
allure.
Demand is for more than physical product: in the
past few years, gold has been sought after for
speculative gains, with interest in gold-backed
funds in particular soaring.
Gold-backed exchange-traded funds (ETFs) are
listed on stock exchanges and offer investors
exposure to price without physical delivery.
Sponsors of the funds buy a matching amount of
physical gold and keep it in bank vaults.
But since the financial crisis accelerated last
autumn, interest has increased in coins and bars,
with investors seeking security rather than
profit.
"There are people who are sufficiently concerned
about the state of the world that, for them,
even ETFs aren't good enough because you only
have a piece of paper," said Stephen Briggs, a
metals strategist at RBS Global Banking & Markets.
"Although that entitles you to gold, it is not
actually gold under the bed."
WORKING AROUND THE CLOCK
Other manufacturers are reducing output and jobs,
but the Royal Canadian Mint quadrupled capacity
to produce bullion gold and silver Maple Leaf
coins in late 2008, and the Austrian Mint is
producing in one week what it usually churns out
in four.
It has extended its shifts throughout the night
and weekend and recruited more workers to cope
with the demand.
"It is weird, given the economic situation,
because all these other companies are doing badly
and we are one of the few companies that are
actually doing really well," said Martin Marsik,
32, who works with thundering machines in the
smelter of the Austrian Mint.
"It is a bit stressful ... (but) no one can
complain he is worried about losing his job,"
said Marsik, his face illuminated by green
flames as he monitored the furnace temperatures
up to 1,100 degrees centigrade (2,012 degrees
Fahrenheit).
..