Most private investors since Trump's 2016 victory buy gold...
MORE private investors in the West chose to buy gold last month than any time since Donald Trump won the US presidency nearly 3 years ago,
writes Adrian Ash, director of research at BullionVault.
Says who? Says the largest single pool of G7 private investors in gold, that's who.
- Between them, BullionVault users own more gold than do most of the world's central banks, more than 38.2 tonnes worth over $1.9bn (£1.5bn, €1.7bn);
- All told, they traded $119.5m of physical gold this August (£98.3m, €108.8m, ¥12.7bn);
- Of the 76,785 people from over 175 countries using BullionVault since it opened in 2005, nearly 9-in-10 live in the US, the European Union, Japan or Canada.
So, if demand to buy gold offers a barometer of fear when prices are rising, then BullionVault...
...where private individuals can sell physical precious metal as easily as they buy...
...trading live online or by smartphone app at the lowest possible costs...
...and storing their property in secure, specialists vaults in their choice of London, New York, Singapore, Toronto or (most popular) Zurich...
...is a good place to check how worried Western investors and savers might be.
And they suddenly see a heap of trouble ahead.
Gold prices rose in August for the third month running, reaching 6.5-year highs in Dollar terms and setting
new all-time record highs in Euros, Japanese Yen, British Pounds, Australian Dollars and a raft of other currencies including the Rupee, currency of
gold's No.2 consumer nation India.
Yet instead of staying negative net of sales, Western investment demand to buy gold jumped as prices surged.
More urgent still, first-time buyers are leading this jump in gold buying. August brought the most new investors to bullion in more than six years.
Yes, last month's record-breaking price rise did invite more profit-taking by existing gold owners.
The number of people selling gold on BullionVault rose 6.7% across August from July's figure.
But people choosing to buy gold jumped faster, with the number ending August with more gold than they started the month rising 34.2% to reach its highest total since November 2016.
Together that took the Gold Investor Index – a unique measure of self-directed Western investors' sentiment towards physical gold, based solely on trading behaviour on the No.1 platform – up to an 11-month high of 55.0 from July's 52.6 reading.
Note that June had seen the index fall to its lowest in almost a decade at 49.1, with the drop below 50.0 indicating more sellers than buyers across the month.
Rising 12.0% since then, the Gold Investor Index has now made its fastest 2-month increase since September 2011, when the series reached its current record high of 71.6 as Dollar gold prices set their current all-time record of $1920 per ounce.
Note also that the index says private gold investment has snapped its negative correlation with prices.
Moving in the same direction only 20.6% of the time between November 2016 and March 2019, the Gold Investor Index has now moved together with the US Dollar gold price in 4 of the last 5 months.
As for first-time precious metal buyers, the number of new BullionVault users rose 159.7% in August from its previous 12-month average, reaching the highest total since April 2013.
Back then, gold's sharpest price drop in three decades spurred a surge of bargain-hunting demand. August 2019 in contrast saw gold record its sharpest 1-month gains since February 2016 in US Dollar terms, adding 8.8% from July's month-average price and peaking above $1540 per ounce.
BullionVault saw both the UK and the US record their strongest new investor growth since Trump's 2016 election victory, up by 133.6% and 98.1% respectively from their 12-month averages.
The count of first-time Eurozone investors rose 178.3%, reaching the highest 1-month total since January 2012 as both Germany and Spain recorded their best-ever month for first-time BullionVault users.
Euro gold prices rose 7.0% on a month-average basis in August, setting new all-time record highs at €1398 per ounce – almost €15 above the prior peak, hit at the height of the Eurozone debt crisis in September 2012.
UK investors also saw gold set new record highs last month, adding 8.8% from July's average price and peaking at £1271 per ounce – more than £75 above the prior peak of September 2011, a month after England saw its worst outbreak of rioting in modern times.
Investor gold buying also outstripped selling by weight, snapping a 3-month trend of profit-taking and creating net demand of almost one-third of a tonne (328kg worth $16.1m, £13.2m, €14.6m).
Taking the total quantity of gold now owned by BullionVault users to 38.2 tonnes (worth $1.9bn, £1.5bn, €1.7bn), that erased 33.2% of May-July's liquidation.
Demand to buy silver jumped even more sharply than gold investing in August, tracking the grey metal's sharper price gains.
Ending August at $18.30 per ounce, silver's US Dollar price set its highest monthly finish since September 2016, and also hit 3-year highs in Sterling and a 2.5-year high in Euros.
The number of silver buyers on BullionVault leapt by 47.4% – the fastest 1-month change in almost 4 years – to also reach the most since Trump's 2016 election victory.
The number of sellers in contrast rose only 7.3% from July. With silver's month-average price shooting 8.8% higher in Dollar terms – the fastest pace since the UK's Brexit referendum of June 2016 – that saw the Silver Investor Index rise from 51.4 to 54.9 last month, its highest reading since July 2017.
As with gold, net demand for silver by weight was strongly positive in August, taking total client holdings up to the 8th new all-time record of the last 12 months at 781 tonnes, growing by 13.8 tonnes (1.8%) from July.
Bottom line?
Indeed, summer 2019 ended with BullionVault's Gold and Silver Investor Indices both rising together with both bullion prices and net investor demand by weight.
Last time that happened, with both metals seeing demand to buy grow by weight and by the number of investors on a price rise, was May 2016...
...just a month before the UK's shock Brexit referendum result blew gold prices sharply higher still from that spring's surge.
This summer's new gold and silver buyers certainly don't expect prices to retreat anytime soon.
