Investors are increasingly turning to the precious metal amid fear of a global war following Iran's attacks on Israel over the weekend.
Three-quarters of investors who bought gold in the last week cited the escalating conflict in the Middle East and fear of a global war as reasons for turning to the precious metal.
According to The Pure Gold Company, which buys physical gold and silver on behalf of private investors, it saw a 711% increase in physical gold (and silver) demand, heightened by Iran’s attacks on Israel on Saturday (13 April).
Investors said they fear retaliation and escalation, which could draw in other major powers into the conflict, said Josh Saul, CEO of the gold investment firm.
He added: “A statement from the G7 group said the major western countries were ready to take measures in response to further destabilisation in the region, and this uncertainty is the main motivation for most of our customers.”
In a bid to cope with demand, the firm has extended its hours into the evenings and weekends.
Fears about ‘volatile markets’
Saul explained that, in times of uncertainty, the relative safe-haven qualities of the asset serve to protect individuals’ investments.
“The underlying motivation for purchasing physical gold is not primarily for gains, but instead to preserve wealth by removing it from the banking system and securing it in an asset class that tends to appreciate during times of uncertainty,” Saul said.
Indeed, the firm reports a 418% increase in people removing exposure to equities within their pension or Self-Invested Personal Pension (SIPP) in order to buy physical gold bars within the same vehicle.
“Clients have expressed concerns about the Middle East on a humanitarian level, but also fear that the volatile markets could potentially wipe out some of their pensions that are exposed to stocks,” he added.
Meanwhile, almost all of its customers buying gold outside of their pension have taken advantage of UK gold and silver coins to benefit from the capital gains exemption.
At the same time, gold and silver prices have been rising steeply over the last few months. In March, it rose 11%, and another 6% has been added since then. However, silver, which is “arguably a lot more undervalued”, has outperformed gold, rising 23% since the start of March.
