Price drives gold investing again, not stockmarket drop...
LAST MONTH's drop in world stock markets failed to spur a sharp jump in gold investing,
writes Adrian Ash, director of research at BullionVault.
Instead, the highest quarter-end gold price in 5 years in US Dollar terms saw net selling by US investors in March. That offset a rise in demand among Eurozone investors, for whom the metal ended last month with its lowest quarterly close since the end of 2015.
Holdings among UK investors also grew as the gold price in Pounds slipped to its lowest quarterly close since the end of 2016.
Globally the number of people starting or growing their personal gold investment position slipped 4.6% from February's figure while the number of sellers rose 7.1%.
Together that pulled the Gold Investor Index – a unique measure of sentiment built solely from actual trading by users of
BullionVault, the largest online market for physical precious metals investing – down from 54.1 in February to 53.7 last month.
Launched in 2005, BullionVault has now enabled more than 70,000 private investors across 175 countries to benefit from the low dealing costs, deep liquidity and ultra-high security of the wholesale bullion market.
BullionVault users – 89% of whom live in North America or Western Europe – today own $1.6 billion worth of gold bullion between them (£1.2bn, €1.3bn, ¥175bn), more than is held by most of the world's central banks, plus a further $373m (£265m, €302m, ¥40bn) in physical silver and $15m (£11m, €12m, ¥1.6bn). BullionVault's online order board also allows private investors to
buy physical platinum free of VAT sales tax.
March 2018 marked the 16th month out of the last 18 that the Gold Investor Index moved in the opposite direction to US Dollar prices.
So despite the continued losses in world stock markets, and
contrary to our expectations when this downturn in equities began at the start of February, private investors as a group remain price sensitive on gold, buying more when prices drop but pausing or selling when prices rise.
This might prove a risky strategy. Gold has historically offered investors a form of insurance during periods of stockmarket stress, rising in price when equities fall.
But for now this price-sensitive behaviour has enabled steady, cost-effective accumulation. The underlying trend continues to see private investment in gold expanding.
By weight, BullionVault clients' gold holdings grew by 85 kilos (2,733 Troy ounces) in March, taking the total to a new record of 38.8 tonnes. More than one tonne greater from 6 months ago – a rise of 2.8% – that metal is vaulted in each client's choice of London, New York, Singapore, Toronto and (most popular) Zurich.
Client silver holdings also grew to a new record in March, swelling by more than 9 tonnes from February to total over 712 tonnes, 3.3% larger from 6 months ago.
The Silver Investor Index fell however, dropping from 54.7 to 53.6 despite lower prices for US, Eurozone and UK investors.
That made March only the 5th month of the last 18 when silver sentiment – as measured by the balance of buyers over sellers on BullionVault – has moved in the same direction as prices.
As with gold investing, the underlying trend for silver bullion remains steady accumulation, responding to prices to cut overall costs.
