Canada exhausts its gold reserves to make one big souvenir coin

By Alexandre Deslongchamps
Bloomberg News Service
Thursday, May 3, 2007

http://www.bloomberg.com/apps/news?pid=20601082&sid=aeCwEp0qT3P4&refer=c...

OTTAWA -- The Royal Canadian Mint today unveiled a gold coin that's as big as a car wheel and as thick as a hardcover novel, in a bid to help win business lost to global competitors.

The 100-kilogram (220-pound) coin, which is 99.999 percent pure gold, the largest and purest piece ever made, was shown to reporters for the first time today at the mint in Ottawa. While each coin has a face value of C$1 million ($900,000), the purity and quantity of the bullion gold they're made of makes them worth more than twice as much, based on current prices.

"The only word I can come up with is, 'Wow!'" Lane Brunner, deputy executive director of the American Numismatic Association's Money Museum in Colorado Springs, Colorado, said of the new Canadian coin. "Something like this is, I don't want to say beyond comprehension, but it's pretty darn close."

The 100-kilogram coin and a standard-sized version with a C$200 face value were designed to help regain market share from facilities in Australia, Austria, China and the U.S. that have started producing coins of similar quality. Canada's mint last year sold 296,100 ounces of gold bullion, a 10 percent drop from 2005. Trade in gold coins is estimated to be worth $3 billion worldwide.

"The Royal Canadian Mint faced a growing field of competitors," said Ian Bennett, the mint's president and chief executive officer. "Minting gold bullion coins of 99.999 percent purity is our answer to that challenge."

Bullion coins are traded based on the market value of the gold they contain, rather than their nominal value. The face value acts as a guarantee, meaning an investor could ask the mint to exchange the coin for C$1 million if the intrinsic value ever dropped below that point.

Gold futures for June delivery rose $9.30, or 1.4 percent, to $684.40 an ounce today on the Comex division of the New York Mercantile Exchange.

Until today, the world's largest gold coin was "Big Phil," a 31-kilogram piece that Austria's mint produced in 2004. That coin was about the size of a car's steering wheel.

The Royal Canadian Mint will issue a small number of the 100-kilogram pieces on a "made to order" basis for a "limited" time period, the mint said in a regulatory filing. Three have already been sold and the mint may sell as many as 10, Bennett said, after showing a promotional video describing the coin as "100 kilos of the purest Canadian pride."

"There's demand for this coin, it's one of a kind," said Nicholas Sarantes, vice-president of Santa Monica, California- based A-Mark Precious Metals Inc. The company bought three and plans to resell them for more than $2.6 million each. "It's an amazing investment."

The Canadian coin, while the world's largest, won't be the most valuable. According to the Money Museum's Brunner, a 1913 U.S. Liberty nickel just sold for $5 million.

Still, the Canadian government had to amend existing law to allow the mint to make a coin of such high value.

Brunner predicted the smaller version, called the Gold Maple Leaf series, will be popular with collectors.

"There is a race to capture market share, to produce coins that people really want to collect," he said. "The Royal Canadian Mint has always been thought of as innovative. But in the past ten years, they've really come out as a leader worldwide. The technology that they use is just incredible."

The mint is also displaying the new pieces at its other facility in Winnipeg, and is seeking other venues to show it off, Bennett said.

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