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U.K. Royal Mint Quadruples Production of Gold Coins
By Thomas Biesheuvel and Nicholas Larkin

The U.K.’s Royal Mint, established in the 13th century, more than quadrupled production of gold coins in the third quarter after demand for the metal increased as investors sought to hedge against a weakening dollar.

Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than tripled to 100,391.3 ounces, the data show.

Gold is set for a ninth annual gain as countries have cut interest rates to near zero percent and spent $2 trillion to pull the global economy out of the worst recession since World War II. The metal reached a record in London yesterday and has gained about 29 percent this year, while the dollar has dropped 7.3 percent against a basket of six currencies.

“There’s still a total lack of confidence in the financial system,” David Russell, a director at Dublin-based brokerage and bullion dealer GoldCore Ltd., said in an interview. “Investors are seeing the benefits of diversifying into gold. Smaller investors are clued into the fact that inflation possibilities are a worry for the future.”

Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces, its Web site showed. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October.

Tangible Asset

Global gold demand climbed 10 percent in the third quarter to 800.3 metric tons from the previous three months after investors bought the metal as a currency hedge and jewelry purchases picked up, the World Gold Council said today.

Bullion fell for the first time in five days in London after reaching $1,152 an ounce yesterday. Gold for immediate delivery declined $10.50, or 0.9 percent, to $1,135 by 2:56 p.m. local time. A ninth annual gain would be the longest winning streak since at least 1948.

Muenze Oesterreich AG, the Austrian mint that’s the world’s largest marketer of pure gold coins, sold 1.9 million ounces of gold so far in 2009, its President Kurt Meyer said last month. That was 23 percent more than last year’s total sales, he said.

“It’s a tangible asset, and its value can be quickly and easily realized,” Russell said. “We’re seeing very good demand in the coin market. Many investors are aware that they’ve been poorly diversified over the past few years.”

ETF Investment

Bullion holdings in some exchange-traded funds have risen to records in recent months. India last month bought 200 metric tons, followed by a smaller purchase by Mauritius. Analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital have forecast further purchases by central banks.

The U.K. mint moved to Llantrisant in Wales from London’s Tower Hill in 1968, three years before Britain switched to a decimal currency system. It makes coins including the 22-carat 2010 Gold Proof Sovereign, weighing 7.99 grams (0.26 ounce) and costing 299 pounds ($500), the state agency’s Web site shows.

The mint’s use of silver rose 56 percent from a year earlier to 94,343.3 ounces in the third quarter, the figures show. Production in the first nine months increased 31 percent to 270,382.6 ounces.

 



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