An Auckland company turning some of the world’s biggest entertainment and sporting brands into pure gold and silver collectibles is taking greater control of a key production cost amid significant swings in precious-metal prices.

BNZ has completed its first ever silver hedge, undertaken for New Zealand Mint’s Agoro business. Alongside gold hedging, the arrangement provides the company with greater certainty over a key input cost.

The silver price surged more than 50 percent in New Zealand dollar terms during January before shedding more than a quarter of its value in two days. The global silver market is expected to record its sixth consecutive annual supply deficit this year.

Agoro can spend several months developing each limited-edition collectible for brands including Star Wars, Disney, Marvel and The Lord of the Rings. The company releases around 200 products annually, selling to collectors across more than 25 international markets.

New Zealand Mint and Agoro Chief Executive Vedran Babic says greater certainty over precious-metal costs will help the company plan future releases.

“We might start developing a collectible many months before it reaches a collector. During that time the silver or gold price can move materially, but the product still needs to work commercially at the price point we've designed it for,” Babic says.

“As Agoro grows internationally and we develop more ambitious products, managing that exposure becomes increasingly important. Hedging gives us greater certainty over a major input cost and lets our teams focus on creating great products for collectors.”

New Zealand Mint has operated since 1967. Its Agoro brand releases precious-metal collectibles each week spanning entertainment and sport, with other licensed properties including Harry Potter, Major League Baseball and WWE.

Its products range from pure silver and gold coins and foils to miniatures and blind boxes, including releases that give collectors the chance to find rare gold versions among the silver pieces.

In July, Agoro joined Wētā Workshop at San Diego Comic-Con, showcasing pure silver and gold collectibles from The Lord of the Rings alongside releases from Marvel and DC.

Its Lord of the Rings blind-box release contained pure-silver, with a nine percent chance of finding an engraved variant and a one percent chance of a pure-gold version.

The new hedging arrangement was developed over several months by New Zealand Mint and BNZ, working alongside the company’s PwC advisers.

BNZ General Manager Markets, Cameron Waugh, says the company wanted greater certainty around movements in gold and silver prices.

“New Zealand Mint has an unusual combination of global commodity exposure and consumer products sold to collectors around the world,” Waugh says.

“Our teams established the approvals and operational framework needed to support silver hedging, giving the company greater flexibility to manage its exposure as its requirements change.”

The silver and gold transactions form part of an ongoing hedging programme, with New Zealand Mint and BNZ regularly reviewing the company’s expected precious-metal requirements.

Babic says the arrangement will provide greater confidence as Agoro commits to future products and production runs.

“Being able to manage the cost earlier gives us greater confidence when committing to new designs and limited-edition releases for collectors around the world.”