Pre-Lehman crisis lows in new gold investing...
HOW MUCH warning do private investors need?
asks Adrian Ash at BullionVault.
Global stock markets lost 6.3% last month on the MSCI World Index. Long-term bond yields sank at the fastest pace since summer 2011's Euro debt crisis, English riots and
gold price peak at $1920.
Yet private gold investing interest in May was the weakest of 2019 so far.
New interest in gold investing in fact fell to pre-
Lehman crisis levels, despite the hard drop in world stock markets.
Says who?
BullionVault is the largest online marketplace for physical precious metals investment. Now used by 75,000 private investors across 175 countries, it's nearly twice the size of its nearest competitor online, caring today for $2.0 billion worth of client gold, silver and platinum property (£1.6bn, €1.8bn, ¥221bn).
And in May, the number of people ending the month with more gold than they began fell to its lowest since April 2018, down 14.2% from the previous month.
The number of sellers rose 35.9% to its largest since February.
Together, that saw the Gold Investor Index – our unique measure of private investor behaviour in physical bullion – record its sharpest 1-month fall since New Year 2018, dropping 4.6% to the lowest reading since December at 52.0 after March and April's 6-month highs of 54.5.
A reading of 50.0 would indicate an equal number of net buyers and net sellers across the month.
The Gold Investor Index set a series peak of 71.7 when gold prices hit their current record high of $1920 in September 2011.
Still more notable by its absence, interest in gold from private investors new to the market fell last month near 11-year lows.
The number of people using BullionVault for the first time dropped 26.7% from the previous 12-month average to its lowest figure since July 2008.
Despite the worsening political crisis over Brexit, the number of new UK users fell to its lowest since before the Northern Rock collapse of September 2007, down 48.8% from the previous 12-month average.
The United States saw a 14.3% drop, France -22.9%, Italy -53.2%, but Germany held firm, bringing 43.6% more new users in May than it did on average over the prior 12 months.
Confirming this pattern,
data from Google show global search volumes for the phrase
"buy gold" in English holding near last summer's drop to mid-2007 levels.
German language searches in contrast (
gold kaufen) held one-third larger from the lows of 5 years ago.
Net-net however, the lack of investing interest saw gold prices hold little changed across the month, slipping 0.2% against the Dollar to $1284 on May's average daily price.
Silver prices meanwhile fell for the 3rd month running in May, dropping to the lowest monthly average since November at $14.63 per ounce.
That spurred new bargain-hunting on BullionVault, with the number of silver buyers rising 15.3% to outpace the 8.1% rise in the number of sellers.
Together that edged the Silver Investor Index up from 52.1 to 52.6 in May.
Silver investing also grew by weight, with BullionVault users adding 2.1 tonnes as a group and taking total holdings up to a new record of 759 tonnes.
Gold holdings fell in contrast, shrinking by 63 kilos to 38.8 tonnes as BullionVault users were net sellers overall.
May's gold selling was led by profit-taking among customers who had first bought lower down, with nearly half of all sellers having first bought in the last 5 years, when Dollar prices averaged almost $45 per ounce below May's monthly average.
The US Mint saw a similar picture, reporting a 60% drop in sales of gold coins from April. Fund managers as a group also pulled money out of gold-backed ETF trust funds in May.
The 3 largest North American
gold-backed ETFs (the GLD, IAU and Sprott's PHYS product) shrank 1.5% between them in May according to data compiled by BullionVault, contracting to the smallest size since September and needing 16 fewer tonnes in backing as a group.
The 3 cheapest US-listed gold ETFs – charging as little as 0.175% in annual fees against BullionVault's 0.12% for secure storage of property you actually own, with insurance included – did expand, but only added 1.8 tonnes between them.
Europe's 3 largest gold-backed ETFs meantime swelled by just 1.0% between them, needing nearly 5.0 extra tonnes of bullion.
Yes, the GLD has already seen its largest 1-day inflow in nearly 3 years, adding a massive 16.4 tonnes on the first working day of June.
But for all the talk of 'safe haven demand', the latest rise in gold prices looks driven more by speculators playing the derivatives market than by physical investing flows. May's pop in demand for gold-mining stock ETFs says the same. Whatever financial fear there is today, it's not enough to drive investing cash into physical bullion.
No doubt further sharp losses on equities will spur new interest, as happened in late 2018's stock market slump and – of course – throughout the financial crisis.
But for now, and despite the downturn in world stock markets, and in the teeth of a looming recession, private investing has gone AWOL in gold.
