Strong investment demand on gold and silver price volatility...
PRIVATE INVESTING in gold continued to grow and silver enjoyed record demand in September as prices rose further amid worsening economic data and geopolitical tensions,
writes director of research Adrian Ash at BullionVault.
Gold prices this September touched new all-time highs for UK and Euro investors, and it averaged the highest daily price in US Dollar terms since March 2013, rising 0.8% to reach $1511 per ounce despite falling hard as the month ended.
Silver prices hit their highest month-average in 3 years, adding over 6.0% to reach $18.17 in US Dollar terms and – like gold – rising for the 4th month in a row despite Monday's drop.
The volatility across precious-metal prices saw daily trading volumes on BullionVault – the largest online and mobile-app marketplace for private investment in physical gold, silver and platinum – average £4.1 million, up 82.0% from the No.1 platform's prior 12-month average.
The number of people ending the month with more gold than they started slipped 8.6% from
August's spike to the most since Donald Trump's US election victory in November 2016.
But the number of net sellers fell three times faster, down 26.5%. Together that pushed the Gold Investor Index – a unique measure of actual trading decisions in physical gold – up from 55.2 to 56.0, the highest reading in 13 months.
2019's jump in precious-metals investing is strongest in the Eurozone, where interest rates are most negative. The crash of DotCom Bubble 2.0 is also putting a shine on physical bullion for private investors.
Yes, September's count of first-time precious-metal investors fell from August's spike near a 3-year high, but it remained 60.7% above the prior 12-month average.
Eurozone residents again showed the strongest new interest, up 72.6% from the prior 12-month average versus a rise of 43.2% in the UK and a slip of 0.9% in the US.
Euro investors also led the jump in net demand for silver, which rose to 21.2 tonnes to set the largest monthly total since BullionVault added the metal to its trading platform in January 2010, five years after opening with gold.
That took the quantity of silver vaulted and insured for users to a new record above 802 tonnes, held in each client's choice of London, Singapore, Toronto or Zurich.
September's gold demand was also positive by weight, with BullionVault users buying 73.9kg as a group net of selling. That took the total quantity of gold vaulted and insured across those same locations plus New York up to a 4-month high of 38.3 tonnes.
Silver prices extended summer 2019's spike in early September to touch the highest since 2016 at $19.65 per ounce, before retreating $2.40 by month's end.
That volatility saw the number of people starting or adding to their silver holdings across the month slip 4.7% from August's 3-year high, but the number of sellers fell harder – shrinking by 15.9% from the previous month's 2.5-year peak.
Together that pushed the Silver Investor Index up from 54.9 to 55.9, a new 2-year high.
How does BullionVault trading compare with other markets for gold and silver?
Data from the US Mint meantime suggests that household demand for new gold or silver bullion coins remains weak, falling on September's price rise to barely one-quarter the level of the same month last year.
Gold jewellery demand is also struggling to digest these high prices in the giant consumer markets of China and India.
Among global investors wanting more cost-efficient exposure, silver's largest bullion-backed ETF – the iShares Silver Trust (NYSEArca: SLV) – saw net liquidation of 1.6% in September.
But like BullionVault,
gold-backed ETFs also saw another month of inflows, taking their total backing very close to 2012's record and putting the 4-month inflow at its largest since early 2009, the depths of the US stock market's banking-crisis crash.
Indeed, gold-backed ETF investment has now absorbed 1 ounce in every 3 mined worldwide since the start of June
according to data compiled
and updated by the World Gold Council.
Bottom line? Widening political fractures make a strong case for spreading risk with gold, but the looming burst of fiscal stimulus plays to the pro-cyclical appeal of silver.
Silver, heavily used by industry and traded in a market only one-tenth the size of gold's, has also been used to exchange and store value for thousands of years.
Judging by September's activity on BullionVault – marketplace for the single largest pool of Western private investors in physical precious metals – a rising number of people expect that financial use to keep growing.
