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Gold demand soars 1,000% as investors fear coronavirus second wave

Paloma Kubiak
Written By:
Paloma Kubiak

UK investors have been panic buying gold bars and coins over the past week as fears grow of a coronavirus second wave.

The Pure Gold Company, which buys physical gold and silver on behalf of private investors, saw a 987% increase in gold sales over the last seven days, compared to the weekly average over the last year.

And more than a third of the buyers (35%) are medical professionals concerned there will be a second spike in coronavirus cases as a result of the protests both in the UK and US, coupled with school and shop re-openings.

The firm’s also seen a 370% increase in financial professionals, including investment bankers, accountants and lawyers, investing in physical gold over the past week.

But the most extreme statistic reveals a 732% increase in investors who have removed exposure to equities within their pension / SIPP to purchase physical gold bars within the same vehicle over the last eight weeks.

The Pure Gold Company said clients have suffered up to a 20% fall in the value of their pension since the onset of the pandemic and “many cannot risk waiting for the markets to rebound”, choosing to “cut their losses” and take refuge in gold.

Josh Saul, CEO of the gold investment firm said: “Investors are concerned the equity markets and the wider economy could spiral downwards again, and have taken refuge in physical gold coins and bars which have risen in value by almost 17% this year.

“Our clients are worried that when government aid, especially the furlough scheme, stops and unemployment invariably increases, our economy will contract along with house prices. Many global economic forums, analysts and investment banks expect a long and enduring recession, or even a depression comparable in scale to the Great Depression of the 1930s.

“And it’s not only about the coronavirus, because the pre-Covid-19 uncertainties, including Brexit, geopolitical tensions, the US elections and global trade issues, continue to exert pressure on economies around the world.”

Saul added that investors aren’t buying gold to make money from the crisis. Instead, it’s about providing safety, security and wealth preservation.

“In such uncertain times like these, the status of gold as an insurance policy is coming into its own. Most UK clients are purchasing UK gold coins which means any gains made are free from capital gains tax.

“In the past, we’ve had clients selling property if they expect a decline in the market, holding the proceeds in gold and then buying when the market dips. Since the reopening of the property market we’ve had an increase in clients looking to try and effect the same hedge, but many are coming up against a host of obstacles. Lending restrictions and job uncertainties have caused buyers to drop out of transactions, and the anticipation of house prices declines is putting off other potential buyers.”