New 2-way gold and silver bullion investing data show
sentiment slipping in September...
SO WHAT did the US Fed's delay to raising
interest rates from 0% do to gold and silver investing last month? asks
Adrian Ash at BullionVault.
Scan the headlines, and you might think Janet Yellen's
loss of nerve cleared out coin shops, spurred record sales by government
mints, and set smelting pots to working over time to meet new demand,
especially for silver coin.
But those numbers capture new buying only, and only
amongst one part of the physical market. Much of it captures only demand from
retailers each month, not directly from investors, with only 2 of the world's
top 5 gold-coin mints selling bullion coin straight to the public online
(numbers 2 and 5 on 2014 data, the Royal
Canadian Mint and the People's Bank of China. Turkey's Darphane, like the US Mint and South Africa's
Rand
Refinery, deals only with approved distributors).
Moreover, re-sale by existing owners, whether to other
investors or back to the smelting pot through retail dealers, doesn't figure.
Nor does weight of demand or supply from larger private investors choosing to
spend more than a couple of hundred or a few thousand bucks and choosing to
avoid the expensive, illiquid market in retail coins.
Luckily, two-way data are available, outside the coin
market, from the world's largest single pool of private gold and silver
owners online.
BullionVault enables private individuals to access wholesale
bullion prices direct, trading metal held in large, market-approved bars
live online 24/7, and storing it in specialist, market-approved vaults in the
client's choice of London, New York, Singapore, Toronto and Zurich.
Minimum deal size is one gram (currently below $37 for
gold and around 50 cents for silver) and cost efficiencies really kick in
above $2,000. But the average holding, in total, is around $50,000. That
matches just less than 10% of the average US household's net worth – a typical allocation
amongst those savers who choose to buy physical precious metals.
Of course, the mean average is pulled higher by those
family offices, charities, small investment funds and other 'high net worth'
investors using BullionVault to buy or sell many millions at once. Because,
like other investors waking up to the costs and hassle of trading coin, they
find it very much safer and more cost efficient than using private banks.
So the median average shows the more typical investor
(half our customers own less, half more) and that stands nearer $15,000 total
in gold and/or silver. Against median US household net worth, that equates to
an 18% allocation – more aggressive, but again far from atypical for those investors who do choose to
put some of their savings into precious metals.
The Gold Investor Index is based solely on the real
trading decisions of BullionVault's 57,000 users worldwide – 89% of whom live
in Western Europe or North America. Launched in 2012, and cited by many analysts and news
outlets since, it measures the number of people who ended the month with
more gold than they began against those who sold, rebased as a proportion of
all existing gold owners at month's start.
A reading of 50.0 would signal a perfect balance between
the number of people starting or adding to their gold holdings with the
number choosing to reduce their investment. And last month, the index slipped
from 52.8 in August to 52.6 in September, an 8-month low marking the third
consecutive drop from this summer's earlier two-year highs at 54.6.
The drop in sentiment towards silver was more dramatic, as
things always are thanks to its more volatile price. BullionVault's Silver
Investor Index also hit two-year highs in early summer, but last month
dropped from 54.5 in August to 51.7 – a four-month low.
By total weight however, BullionVault users – primarily
self-directed private investors – added over 200 kilograms to their gold
holdings as a group, reaching a new record above 34.3 tonnes. Growing in 7 of
the last 9 months, that is the strongest run since spring 2013.
BullionVault users also grew their total silver holdings
by almost 3 tonnes to a new record 531 tonnes. Again, that marked a 0.6%
increase from end-August. But year-to-date – and contrary to headlines about
"Silver Mints Sold Out!" in the expensive, illiquid market for coin
at retail – gold in fact remains the more popular choice amongst private
investors.
So far in 2015, BullionVault user gold holdings have grown
by 1.6 tonnes, 85% ahead of the same period last year. Silver holdings have
grown by 42.7 tonnes net, some 20% stronger than net purchases during the
first nine months of 2014.
All told then, and judged net of investor selling,
September saw 2015's solid upturn in private interest in gold ease but
continue, and continue ahead of silver. Private investors were net buyers by
weight, and buyers outnumbered sellers. But the action was far less frantic
than the coin mint headlines suggest.
How come? Gold prices steadied in September after falling
for 3 months straight, and that rally deterred more active traders looking
for bargain prices. Indeed, we've already seen some profit-taking on the
strong jump starting after last week's poor US jobs data – and it's been more
pronounced in silver, already 7% higher in wholesale trading from the last
day of last month.
Looking ahead, the US Fed's loss of nerve over finally
raising interest rates from 0% has worsened the uncertainty for investors,
and that is affecting gold and silver sentiment too. Precious metals may have
stabilized above the summer's new 5- and 6-year lows, but prices are
searching for clear direction right now.
Longer-term investors continue to begin or add to their
gold holdings, and silver continues to attract new money too. But there is no
panic into physical bullion, not outside the even-higher-than-usual mark ups
being charged to coin buyers in the retail market. The wholesale supply-chain
remains well stocked. Private individuals wanting to access it – and save up
to 10% versus coins, and save up
to 20% VAT sales tax or more on silver – can put their measured,
considered decision into action using BullionVault.
