Gold News

Gold Investing Hits 2-Year High as Price Sets Yet Another Record

Record high BullionVault client gold holdings too...
DEMAND to invest in gold on BullionVault just reached a 2-year high as the precious metal rose to yet another record price, writes Adrian Ash at the leading marketplace for securely stored precious metals, now caring for $3.9 billion of physical bullion (£3.1bn, €3.6bn, ¥571bn) for more than 100,000 users worldwide.
Net of client selling across the second quarter, demand from people choosing to invest in gold on BullionVault reversed New Year 2023's profit-taking with the heaviest quarterly demand since spring 2021.
Gold prices meanwhile set a fresh calendar-quarter record in terms of all major currencies, averaging $1975 per Troy ounce (£1577 or €1814/oz, ¥8688 per gram) between April and June.
Gold last year set a new annual average record of $1800 per Troy ounce, before rising to a new quarter-end high of $1980 in March, a new month-average high of $2000 across April, and a new intraday spot-market high of $2080 in early May.
Rising interest rates might now present a challenge to gold's run of record prices in the second half of 2023. But the factors that have so far helped gold beat the steepest rate hikes since the early 1980s remain unresolved.
The underlying support for gold investment prices being spurred by geopolitics, strong inflation and financial uncertainty is now compounded by the risk of Western central banks doing too much, too late to tackle the cost of living crisis, triggering a recession.
Chart of the Gold Investor Index, last 3 years. Source: BullionVault
On a monthly basis, June's average gold price fell 2.4% in US Dollar terms from May, the deepest drop since last September.
But that only took the monthly gold price down to a 3-month low of $1942 per Troy ounce (4-month low of £1538/oz, 3-month low of €1791, ¥8818 per gram), less than $60 below April's record high of $2000.
Private individuals weighing whether to invest in gold however responded the most strongly since October – back when gold had fallen to its cheapest in 2.5 years – with the Gold Investor Index rising 1.8 points to an 8-month high of 56.2.
The index tracks the balance of buyers versus sellers. It would read 50.0 if the number of people starting or adding to their gold holdings exactly matched the number of sellers. The Gold Investor Index set a decade high of 65.9 as the Covid Crisis took hold in March 2020, and it fell to a 4.5-year low of 50.6 this January.
Totalling more than half-a-tonne across April to June, investor purchases net of selling in Q2 were the heaviest since Q2 2021 and took total BullionVault client holdings to a new record above 48.2 tonnes worth $2.9 billion (£2.3bn, €2.7bn, ¥428bn).
But although investment gold demand has risen together with bullion prices this spring, interest from new buyers has fallen hard after spiking on March's mini-crisis in US banking, and buying is now pretty much confined to existing gold owners.
June is typically a quiet month for new interest in precious metals, but last month saw the fewest first-time buyers since April 2014, back when gold and silver were mired in a deep bear market following the end of the global financial crisis.
With rates on cash continuing to rise, the general public looks likely to stay shy of choosing to invest in gold until a new crisis throws the spotlight onto its value as financial insurance once again.
Buying gold ahead of such shocks of course provides greater potential. But you can't tell anyone anything, and worldwide the number of first-time precious metals investors fell by almost one third last month from May, down 32.8% on BullionVault and led by the United States (-59.7%) and France (-58.1%) with the UK relatively firm (-19.7%).
The number of first-time buyers held strongest in Germany (-8.7%), where new interest had already fallen hard in the first half of 2023 from the phenomenal levels of the last decade thanks to record-high Euro gold prices and rising interest rates on cash-in-the-bank inviting existing owners to sell and take profit.
Chart of the Silver Investor Index, last 3 years. Source: BullionVault
Unlike gold, the 3.4% drop in silver's average price across June – down to a 3-month low of $23.41 (£18.55 and €21.60 per ounce, ¥106 per gram) – saw the number of buyers retreat on BullionVault, but the number of sellers fell more steeply, helping the Silver Investor Index slip only 0.1 points to 52.6 from May's 3-month high.
Across Q2, demand by weight also contrasted with gold, showing the heaviest net selling since Q1 2022 with investors liquidating 11.8 tonnes.
That meant total client holdings of the more industrially-useful precious metal ended June at 1,251 tonnes, worth $903 million (£715m, €832, ¥130bn) and recovering 10 tonnes from May's 11-month low.
Silver has met more profit-taking than gold among active traders so far in 2023 thanks to its steeper gains. Demand meantime looks capped by silver's longer-term underperformance, the lack of wider new interest in precious metals and a preference among existing investors for gold as a form of financial insurance.
All that's despite the grey metal's growing use in green-energy technologies, led by PV solar power threatening a shortage of silver in the years ahead.
Again, you can't tell anyone anything when it matters. It only becomes obvious to everyone when, well, it has become obvious to everyone.

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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