Good as gold despite drop in price

New Zealand Mint chief executive Simon Harding says business is good, despite the decline in the gold price nearing “bear” market territory.

The stock-in-trade of NZ Mint, a private business which also produces commemorative coins such as the coming Dr Who 50th anniversary coin, is providing investment grade gold and silver bullion in the form of both imported Swiss gold, and New Zealand-minted gold and silver Kiwis.

Following the global financial crisis, there was a bull market in gold, which has a history of appreciating in value during times of economic uncertainty. NZ Mint enjoyed a boom in business.

New Zealand investors did not see the full force of those spectacular rises as appreciation in the value of the New Zealand dollar counteracted the increase in the gold price set in US dollars.

However, since hitting highs in September 2011, the price of gold has slumped.

From a high of just over US$1920 ($2237) a troy ounce, the price of gold has fallen by around 17 per cent, says Harding. While that technically fails to trigger the 20 per cent “bear” market definition some favour, it is a substantial drop.

Harding said the Mint was not in the business of providing advice, and the investment community was split over whether the current price was the prelude of worse to come or it was just taking a breather before beginning to climb again.

The gold bears point to improving United States economic data, while the bulls point to the “quantitative easing” going on in the US and most recently in Japan as well as the continued economic and political uncertainty around the world.

Gold is regularly spoken of as a store of value in hard economic times, though previous peaks and troughs have shown investors have to pick when to sell or risk seeing their gains evaporate.

Harding said the split in opinion over future price did not herald an end to the golden weather for the NZ Mint. The past couple of weeks had seen an uptick in trading activity, he said, with some deciding now was the time to cash out, though an equal number were taking the current price as a buying opportunity.

And there was always a supply of customers looking for a small bullion holding to diversify their investment portfolios.

The Mint sells, and holds in its vaults, gold for New Zealand gold buyers. It also holds bullion for overseas investors, some of whom, Harding said, value the security and stability New Zealand could offer.


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