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The Midas touch: Market worries driving gold investment boom

John Fitzsimons
Written By:
John Fitzsimons

Increasing numbers of investors have put their money into precious metals in a bid to counter market uncertainty, stats from the Royal Mint have suggested.

Data from the Royal Mint showed that there was a jump of around 26% year on year in the volume of gold investments during 2022. The increase was particularly pronounced in gold bar investments, with sales increasing by 33.5% over the period.

The Royal Mint argued this is likely to continue, given its polling found that almost a quarter (23%) of investors plan to put their money into gold this year. This figure increases to 26% among Gen-X investors.

Precious metals as a whole are being targeted by almost one in three (30%) investors, behind only stocks and funds. What’s more, around one in six investors who have not previously put their money into precious metals plan to do so in the future.

Why investors are turning to gold

The Royal Mint’s research found that investors are targeting metals in order to offer their portfolios some protection given the volatility of regular investment markets. More than half (53%) of those looking to invest in precious metals in future said they were attracted by its ‘safe haven’ status, with almost a third (29%) believing it is less risky than other investments. 

The Royal Mint noted that the price of gold started 2023 on a nine-month high, and has now hit a 12-month high following the collapse of Silicon Valley Bank. The high-profile collapse pushed gold prices to $2,000, as well as driving a 230% week-on-week increase in sales at Royal Mint.

Andrew Dickey, director of precious metals at the Royal Mint, said that investors were increasingly aware of risk and looking to take steps to protect their portfolios.

He continued: “From our experience, gold and precious metals grow in popularity during challenging times for the global economy as investors look to diversify their portfolios and hedge against inflation. However, for many risk-conscious investors, these market moments are only a trigger for a long-term investment in precious metals that grows over many decades and retains what many see as its ‘safe haven’ status.”

The Royal Mint’s data is supported by figures from Bullionvault, which found that the number of people buying precious metals for the first time doubled in March from the month before.

New account openings on the site rose by 94.8% from February, and grew by 41.3% above the prior 12-month average. It hit the highest level seen since the Russian invasion of Ukraine.

What to consider before investing in gold

However, there are some important factors to consider before investing in gold, argues Dickey. Here are some of the factors to take into account before investing.

How are you going to invest? ‒ There is a variety of different ways in which you can invest in gold, from the physical to the digital. While investing in physical gold may be your preference, investing in fractional amounts digitally may be more affordable.

There is a premium ‒ Many forms of precious metals investments come with a premium, which is how much you pay for the product over the price of the metal contained. Smaller products tend to have a slightly higher premium, but these can be reduced substantially by investing digitally.

Understand the tax benefits ‒ If the precious metal product is classed as legal tender, such as a bullion coin, then they are classed as exempt from Capital Gains Tax.

How long are you investing for? ‒ As with regular assets, investing over the long term can help you ride out market dips and give you a better chance of profiting from your investment in precious metals.

Related: Gold set to shine in 2023: Five investing mistakes to avoid.