Wealthy and high net investors internationally are moving to the safety of physical gold bullion in secure vaults according to Goldman Sachs.
This is according to important data and a chart in the recent very important Goldman note to clients which was not picked up on in the select media who covered it initially.
Trade data implies that gold in storage has increased far more rapidly than is reflected by financial market instruments, indicating a widespread preference for physical gold instead of gold-linked financial assets. (Source: Goldman Sachs via Yahoo Finance)We covered the Goldman note as reported by Bloomberg on Monday and highlighted Goldman’s very positive view towards gold over bonds and their forecast for $1,600 gold in 2020.
A key point and important data and a chart in the note was not picked up by the select media who covered it. It showed and was subsequently picked up on by Yahoo Finance that wealthy high net worth investors and possibly institutions (besides central banks who are already the largest gold buyers this year) are moving to own physical gold in secure vaults globally.
Owning non ETF gold and non bank physical gold coins and bars appears to be the increasingly preferred safe haven method to “hedge against tail events” by wealthy investors.
This is something that GoldCore, as a gold storage specialist, has been seeing much more of in 2019, with many wealthy investors moving from ETF gold and bank gold holdings (either safety deposit box of vaulted) and online gold platforms to the fully segregated, vaulted and outright gold ownership of GoldCore Secure Storage.
According to Goldman Sachs:
“Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs.” (see Exhibit 18 above)
Goldman said the data is consistent with reports that demand for gold coins and gold bars stored in vaults is surging globally.
Trade data implies that gold in storage has increased far more rapidly than is reflected by financial market instruments, indicating a widespread preference for physical gold instead of gold-linked financial assets …
Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.
“Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.”
Goldman appear to be warning of the risks in financial products such as gold exchange traded funds and commodities (gold ETFs and ETCs) above.
As the Yahoo Finance journalist Myles Udland wrote:
“This means that for those including gold in their end-of-the-world trade, owning gold bullion is a must.”
Myles Udland via Yahoo Finance
The Goldman note said that political uncertainty and recession fears as the motivator for the move toward gold. It also mentioned increasing concerns about financial repression including wealth taxes, increasing interest in Modern Monetary Theory (essentially money-printing) and the current loose central bank monetary policy and soon to be ultra loose monetary policies.
It makes sense for all investors, retail, high net worth, family office and pensions to invest in and own physical gold. It is important that the gold bought is fully segregated and owned in secure vaults strictly outside the banking and financial system.
This ensures protection from worst case scenarios and confers all important liquidity when you need to take delivery and or liquidate your gold and silver bullion coin and bar holdings.
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GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)
12-Dec-19 1474.70 1467.80, 1117.82 1116.56 & 1325.02 1319.55
11-Dec-19 1468.05 1466.80, 1116.89 1112.71 & 1324.92 1322.47
10-Dec-19 1464.45 1464.95, 1112.25 1112.04 & 1322.69 1322.26
09-Dec-19 1463.60 1461.70, 1112.04 1111.48 & 1323.09 1320.06
06-Dec-19 1474.85 1459.65, 1122.80 1112.40 & 1328.54 1320.25
05-Dec-19 1474.60 1475.95, 1122.76 1122.31 & 1329.65 1329.54
04-Dec-19 1475.85 1475.10, 1131.53 1125.94 & 1332.54 1327.89
03-Dec-19 1470.40 1477.30, 1132.50 1136.78 & 1328.51 1333.12
02-Dec-19 1457.50 1461.15, 1130.00 1130.05 & 1323.26 1321.17
29-Nov-19 1456.35 1460.15, 1129.55 1131.32 & 1323.24 1327.42
28-Nov-19 1457.55 1454.65, 1127.27 1127.35 & 1323.60 1321.84
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