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Private investors pile into gold

Emma Lunn
Written By:
Emma Lunn

More and more people are buying gold for the first time as investors search for a safe haven.

More private investors bought gold last month than any time since Donald Trump won the US presidency nearly three years ago, according to BullionVault.

The physical gold trading platform reported that for UK investors, gold set new record-high prices in August, adding 8.8 per cent from July’s average price and peaking at £1,271 per ounce.

This is more than £75 above the prior peak of September 2011, a month after England saw rioting on the streets.

BullionVault saw the UK record its strongest new investor growth since Trump’s 2016 election victory, up by 133.6 per cent from the 12-month average. Gold is also making new all-time highs in Euro terms, plus six-and-a-half year records against the US dollar.

The number of people selling gold on BullionVault rose 6.7 per cent across August from July. But the number of buyers jumped faster, up 34.2 per cent to its highest since November 2016.

Together that took the Gold Investor Index – a unique measure of self-directed investors’ sentiment towards physical gold, based solely on actual trading behaviour – up to an 11-month high of 55 from July’s 52.6 reading.

June had seen the index fall to its lowest in almost a decade at 49.1, with the drop below 50 indicating more sellers than buyers across the month.

Rising 12 per cent since then, the Gold Investor Index has now made its fastest two-month increase since September 2011, when the series reached its current record high of 71.6 as dollar gold prices set their current all-time record of $1,920 per ounce.

Adrian Ash, director of research at BullionVault.com, said: “If gold demand and prices offer a barometer of fear, then Western investors and savers suddenly see a heap of trouble ahead. Gold demand has jumped as prices surge. That snaps the pattern of cautious bargain-hunting and profit-taking which has capped the market since Trump won the White House in late 2016.

“First-time buyers are leading this jump in gold demand, with August bringing the most new investors to bullion in more than six years.”

Worldwide, the number of first-time BullionVault users rose 159.7 per cent in August, from the 12-month average, reaching the highest total since April 2013.

Like the UK, the US saw its heaviest growth in first-time bullion investors since November 2016. Both Germany and Spain recorded their best-ever month for new BullionVault users.

Investor gold buying also outstripped selling by weight, snapping a three-month trend of profit-taking and creating net demand of almost one-third of a tonne (328kg worth $16.1m, £13.2m, or €14.6m).

The gold price has been steadily climbing since early May when the US and China increased tariffs on each other’s exports, and hit a five-year high in June. Many investors buy gold to hedge against the decline of a currency, usually the US dollar.