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Demand for Australian Gold Bullion Remains Strong in 2009

No matter the mint in question, there are signs that the strong demand for gold that began in mid-2008 and continued to expand unabated throughout the year, will continue. In the US alone, the demand for physical gold bullion increased by an estimated 900% after Bear Stearns collapsed. Globally, this figure stands at 300% on the year.

The overwhelming majority of prognostications from gold commodity forecasters expect that demand for gold from a wider consumer base (including some otherwise untraditional customers) will continue to overwhelm the available gold supply in the first months of 2009. Furthermore, if gold and silver spot prices should increase in the wake of continuing market turbulence and currency fluctuations, the range of people who are even capable of buying gold will shift.

The cost of producing gold was up in 2008, with increases to fuel costs early in the year blamed for a decrease in both mining and shipping of gold, worldwide. This has also contributed to the fall in gold and silver spot prices throughout much of 2008. Curiously, the rise in the gold and silver spot prices was not as steep as one might have expected in late 2008, given the dramatic increase in demand.

In response to past performance and these projections, the Perth Mint has rationed sales of gold bullion. This is actually the second time in less than 6 months that such an announcement has been made. The first one was a complete suspension of sales in late 2008.

Only the 1-ounce “Kangaroo” gold bullion coin is still being sold on- demand. While there are still several other types of gold bullion coins that are being sold from the mint, the sales of bars are presumed to be held back indefinitely. Sources at the mint say they are simply unable to keep up with the demand and want to disseminate the coins to as many people as possible.

This is significant given how much of the world’s gold supply this particular mint is responsible for producing, storing and disseminating. Over 10% of the world’s gold supply has been estimated to reside at the Perth Mint. In addition to suspending sales from the Perth mint in late 2008, sales were also interrupted at the US Mint, the South African Mint and the Royal Canadian Mint.

With their first forecast for 2009, Australia’s Commodities Research professionals predict a continuing demand and corresponding rise in the value of gold in the global marketplace. It remains to be seen whether the Perth Mint and others will be able to keep up with that demand.

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