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Royal Canadian Mint under strain to meet demand for gold
By Eric Lam
National Post, Toronto
Friday, October 3, 2008
The plunging stock market in Canada has led to a spike in gold purchases, and gold brokers may soon have trouble keeping up with demand.
A teller at Scotiabank's precious metals exchange desk in the Scotia Plaza said Thursday that nervous investors had already purchased all of Scotia's one-ounce gold bullion bars, which are slightly cheaper than the Scotia one-ounce gold coins. The bars, which are emblazoned with the Scotiabank logo, are expected to be in stock by the end of October or early November.
"It's been crazy here," the teller said.
All other denominations, including the one-ounce gold maple leaves produced by the Royal Canadian Mint, are readily available at the moment.
Michael Levy, a gold broker based in Surrey, B.C., said the volume of people purchasing gold is at its highest since the inflation scare of 1979. "People were buying then because of inflation, now because of a growing distrust in paper currency," he said. "It's a different mentality but the same rush."
Mr. Levy said that the Royal Canadian Mint had stretched its delivery schedule from the usual two to four days to as much as a week. He suspects the increased demand from worldwide gold investors after the U.S. Mint ran out of one-ounce American Eagle coins in August and one-ounce American Buffalo coins at the end of September is putting an increased strain on the RCM.
"Their ability to produce is finite. You can't just buy another press. If this demand keeps up, keeps expanding, well, there will be a supply problem," he said.
Alex Reeves, a spokesperson with the mint, said they are on pace to exceed their 2007 totals of 278,000 ounces of gold bullion coins, bars, and wafers produced. The mint's Ottawa facility is running at maximum capacity, he said.
Distributors "would like more gold than we can produce but we're supplying the best we can. Look at that as good news," he said. "We're able to keep producing gold while the U.S. Mint has to throw up their hands and say, 'We're out.'"
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