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Royal Canadian Mint considers offering silver bullion receipts
By Tim Kiladze
The Globe and Mail, Toronto
Tuesday, December 13, 2011
http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwis...
Following the wild success of its $600-million initial public offering for gold exchange-traded receipts, which targeted retail investors, the Royal Canadian Mint is open to launching a similar product for silver.
Ian Bennett, the Mint's chief executive officer, was in Toronto Tuesday morning to open trading on the Toronto Stock Exchange, and he sat down with The Globe and Mail to talk about what the Mint is up to. While much of the conversation centred on the latest deal, he did say that the Mint is mandated to operate "in anticipation of profit," and it's very clear that its bullion and refinery unit is driving business right now.
This division, which is comprised of producing and refining gold and silver products, has seen explosive growth since 2008. Three years ago revenue from this unit was $285-million. In 2010 it was almost $2 billion. This success is the reason the Mint decided to launch a gold product, and it has heard of demand for a similar silver product.
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"A lot of people during the road show expressed an interest in silver," Mr. Bennett said. "That is something that the fertile minds of our bankers and the people at the Mint are going to be looking at."
The key problem with silver, though, is that it takes a lot more room to store an equivalent amount of value.
Aside from talk of potential products, Mr. Bennett noted that demand for the Mint's gold has been so strong the past two years that at times "little old Canada" has been the No. 1 one bullion supplier to the world, surpassing the United States, which is typically No. 1. This happens because the Royal Canadian Mint is the only mint in the world that refines its own product. So when the U.S. Mint gets bogged down with supply chain problems, Canada’s can keep churning out new product.
As for who is buying the Mint's gold, you may be surprised to know that U.S. customers are by far the biggest buyers. Since 2008, a number of extremely wealthy people and institutions south of the border have shifted to gold, and they needed to buy from Canada in order to do that.
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