Gold News

Private Investors Buy the Dip in Gold

10-month high in gold buying near $2000 record price...
DEMAND to buy gold bullion across Western economies was the heaviest in 10 months in May as private investors took advantage of the precious metal dipping 0.5% in price from the prior month's new all-time high, writes Adrian Ash at BullionVault.
Averaging a record $2000 per Troy ounce in April, gold bullion averaged $1990 last month, swinging between a new all-time high in spot-market trade of $2078 and a 2-month low of $1932. That saw users of BullionVault – the world's largest marketplace for private investors in physical precious metals, 89% of whose client-base lives in Western Europe or North America – expand their holdings by more than a quarter of a tonne.
That marked the heaviest 1-month inflow since last July when month-average prices sank by 5.3% in US Dollar terms.
So while short-term volatility in gold prices has offered more active traders the chance to take quick profits, the underlying uptrend is encouraging longer-term investors to steadily build their holdings even at these historic highs. And after setting a new annual average record at $1800 in 2022, gold has continued to stair-step higher across the first half of 2023.
With BullionVault users' gold holdings growing by 251 kilograms in May to a total of 48.0 tonnes – just 0.1 tonnes shy of end-December's record – the Gold Investor Index also rose, reaching its highest since February at 54.4 with an increase of 0.5 points from April.
The Gold Investor Index tracks actual buying and selling on BullionVault, the London-based fintech used by over 100,000 private investors worldwide to now hold $3.0 billion of gold – all securely stored and insured in each customer's choice of London, New York, Singapore, Toronto or Zurich – plus another $1.0bn in silver, platinum and palladium combined.
It measures the number of people starting or adding to their gold holdings across the month against the number of those choosing to sell. The Gold Investor Index would read 50.0 if the number of buyers exactly matched the number of sellers. The index set a decade high of 65.9 in March 2020 as the Covid Crisis took hold, and it dropped to a 3.5-year low of 50.6 this January as prices jumped sharply, spurring profit-taking among active investors.
The Gold Investor Index, all data to May 2023. Source: BullionVault
Like jewelry buyers in gold's giant Asian consumer markets, private investors in the West are growing acclimatized to these higher prices, seizing on even a small price-dip to expand their holdings after previously choosing to take profit on BullionVault during the New Year's steep price rise.
While gold demand is primarily coming from existing investors rather than attracting new buyers, growth in first-time US investors has continued as rising interest rates and mixed economic data add to anxiety over the stability of both the banking sector and Washington's sticking-plaster solution to the debt-ceiling debacle.
The number of people buying precious metals for the first time on BullionVault retreated in May for the 2nd month running from March's 12-month high, down 17.8% worldwide from April and led by a 30.4% drop in new Eurozone investors.
This extended the pattern BullionVault has reported since New Year, with Germany's phenomenal growth over the last decade easing back further as Euro gold prices set new all-time highs – up 0.6% in May to a month-average record of €1833 per Troy ounce – and as cash in the bank now offers a small yield to German savers after the European Central Bank finally ended the negative interest-rate policy it began in 2014.
Versus the prior 12-month average, May's count of first-time users worldwide fell 9.5% with Germany down 28.2% but the USA up 27.6%.
The count of UK investors choosing to buy gold or the other precious metals for the first time in May meanwhile held 2.9% above the prior 12-month average as the UK gold price in Pounds per ounce edged back 0.7% from April's new average record high of £1606.
The Silver Investor Index, all data to May 2023. Source: BullionVault
The Silver Investor Index also rose last month to its strongest since February, making its steepest jump since the #silversqueeze ramp of January 2021 with an increase of 4.8 points to 52.7 from April's near-record low of 47.9, when the highest month-average price since March 2022 at $25.00 saw sellers outnumber buyers on BullionVault.
That rebound in the Silver Investor Index was contradicted, however, by net selling by weight, with BullionVault users as a group liquidating 1.4 tonnes of silver to take their total holdings down to 1,241.5 tonnes, the smallest since June last year and 2.0% below October 2022's all-time record.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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