Gold Investing Hits Record on Stock Market Plunge

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Published : November 06th, 2018
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Category : Gold and Silver
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The WORST DROP in global stock markets since May 2012 last month saw a surge in gold investing by private individuals, writes Adrian Ash at BullionVault.

October saw the strongest investing demand on a rising gold price since Donald Trump took office in January 2017, and it's the strongest growth on a price rise of this size since the Brexit vote in mid-2016. 

As the MSCI World Index fell 7.6% in October, touching 13-month lows, the price of gold in US Dollars recovered from 20-month lows, rising 1.4% to reach its highest monthly average since July at $1215 per ounce.

For Eurozone investors, last month's return of Italy's huge government debt to the headlines saw gold prices rise 8.0% at October's peak from September's drop to 32-month lows.

The UK gold price in Pounds per ounce meantime jumped 7.9% after making its first dip below £900 since the day of the Brexit referendum, 23 June 2016, before easing back to £945 today (or £30.40 per gram).

Yet instead of selling to take profit as they have on recent gold price spikes, users of BullionVault – the world's largest online platform for physical precious metal investment – were net buyers of gold as a group in October, adding more than one-fifth of a tonne (212 kilograms) to reach new record holdings above 39.1 tonnes.

Over 1 tonne larger from this time last year – and stored in specialist high-security vaults in each client's choice of London, New York, Singapore, Toronto or Zurich – that new record gold holding among BullionVault users stands more than 4 tonnes larger from the eve of the UK's referendum on leaving the EU in June 2016.


Now caring for nearly $2.0 billion of client precious metals, BullionVault also saw the number of gold buyers rise in October from September – again snapping the trend towards bargain-hunting and profit-taking seen since the start of last year.
Though small at 1.0%, this month-on-month rise in the number of buyers coincided with a rising gold price for the first time since September 2017 and only the second time since the UK's Brexit referendum shock of summer 2016.

The number of sellers jumped much faster however, rising 61.7% to the highest number since May as gold prices rose.

That pulled down the Gold Investor Index – a unique measure of private investor behaviour in physical precious metals – from 55.0 in September to a 5-month low of 53.8 last month.

BullionVault's Gold Investor Index complements other gold and silver market data, showing revealed preference – not survey-based 'intentions' – among the world's largest single pool of self-directed bullion investors. To learn more, see this article in The Alchemist magazine.

Silver prices meantime rose in October 2018 at their fastest monthly pace since January, up 2.3% in US Dollar terms.

Unlike in gold, silver's price rise saw the number of buyers across October fall from September, down 13.4%. The number of sellers rose 46.9% to the highest since June, when silver prices averaged almost $2 above last month's price of $14.58 per ounce.

Together that saw the Silver Investor Index fall to a 4-month low at 52.2 after reading 54.3 in September.


Last month's falling stock markets also saw a rise in the number of people using BullionVault.com for the first time.

October's count of new users rose 6.9% from the prior 12-month average, led by an 88.6% jump in the number of first-time users from Italy and a 57.3% rise in France.

All told, the number of Eurozone residents using BullionVault for the first time in October rose 30.9% from the previous 1-year average to reach the highest monthly total since January.

Bottom line? While pundits and analysts fretted over the last two years about worsening political and economic risk, private investors as a group became very relaxed towards gold, buying more on falling prices and selling to take profit on a spike.

The plunge in world stock markets has snapped that price-sensitive behaviour, at least for now. November's rally in the stockmarket has so far capped gold's price rise, but private-investor demand continues to hold strong.

That's because, as the global financial crisis showed a decade ago, gold tends to do well when other assets do badly. And with global stock markets shaken so badly near this year's all-time record highs, gold investment is likely to hold its appeal for investors wanting some measure of portfolio insurance.
You can receive your first gram of Gold free by opening an account with Bullion Vault : Click here.
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Adrian Ash is head of research at BullionVault.com, the fastest growing gold bullion service online. Formerly head of editorial at Fleet Street Publications Ltd – the UK's leading publishers of investment advice for private investors – he is also City correspondent for The Daily Reckoning in London, and a regular contributor to MoneyWeek magazine.
WebsiteSubscribe to his services
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