Western Gold Investing Sentiment Hits 11-Month High
Tuesday, 6/04/2024 12:08
Gold and silver bullion investment holdings hit fresh record value...
GOLD INVESTING sentiment among Western economies rose again in May, reaching its strongest in 11 months on world-leading marketplace BullionVault as the precious metal extended its run of new record prices in US Dollar terms,
writes Adrian Ash, director of research.
Profit-taking on existing gold bullion investments eased back for the second month running. The number of new users choosing to buy precious metals for the first time was more than 50% above its prior 12-month average.
So having seized the gains offered by central banks and Chinese investors driving bullion prices up to new record highs,
Western profit-taking in gold looks to be nearing exhaustion.
New interest in buying physical gold – securely vaulted, insured and ready for instant sale in the form of large, low-cost
gold bullion bars – has meanwhile rebounded as 2024's packed election schedule adds domestic uncertainty to global tensions and conflict.
May 2024 saw bullion investing prices flatline at April's new record gold highs in UK Pound and Euro terms, holding at £1862 and €2175 per Troy ounce.
But priced in the US Dollar, the 'safe haven' precious metal rose 1.7% to set its 3rd new month-average high in a row at $2352.
In response, the number of net buyers across the month on BullionVault – now caring for a record $4.6 billion (£3.6bn, €4.2bn, ¥729bn) of gold, silver, platinum and palladium, and finding 9-in-10 of its 100,000 clients in Western Europe and North America – slipped by 8.1% from April's 10-month high.
The number of people choosing to sell gold in contrast more than halved, down by 51.5% to the fewest since August last year. Together that pushed the
Gold Investor Index – our unique measure of revealed preference on the world's largest private-investor marketplace for physical precious metals – higher by 2.8 points from April to 54.4.
The highest reading since June last year, that was 6.9 points above
March's record low Gold Investor Index of 47.5. Any reading above 50.0 signals more net buyers than net sellers across the month. The Gold Investor Index set a decade-high of 65.9 as the Covid Crisis took hold in March 2020.
Last time our
Investor Index for gold was this high, gold prices were $430 cheaper per ounce (or £350 lower for UK Pound gold prices, and €415 cheaper in Euros).
So while this spring's run of new record prices may be running out of steam, gold's unique appeal as a financial and geopolitical hedge is now meeting a resurgence in Western investment.
As a group, investors used BullionVault to sell just 134 kilograms more gold than they chose to buy as a group in May, liquidating less than half the quantity sold in April and trimming their aggregate holdings by 0.3%, the smallest net outflow since January.
That took the total quantity of gold now held in each user's choice of London, New York, Singapore, Toronto or (most popular) Zurich down to 45.1 tonnes, the lowest end-month weight since September 2020. But those securely stored and insured holdings still set a fresh month-end Dollar and Japanese Yen record by value above $3.4 billion and ¥534bn, and held almost unchanged near April's Sterling and Euro records at £2.6bn and €3.1bn.
The number of first-time bullion investors meanwhile slipped in May by 17.3% from
April's 13-month high for new precious metals interest. But it was 51.3% greater than the 12-month average, led by a steep rise in the number of new BullionVault users living in the USA, France and Spain.
As you can see, the Silver Investor Index also rallied further in May from March's new all-time low.
But unlike our measure of gold investing sentiment, it continued to signal more sellers than buyers across the month with a reading of 48.0 – only 0.7 points higher from April and 3.0 points above the month before – as the more industrially-useful precious metal set its highest month-average price in over 11 years in US Dollar terms at $29.40 per Troy ounce and neared 13-year highs in UK Pounds and Euros at £23.28 and €27.20.
More like gold, silver selling by BullionVault users outran demand by the smallest margin since January, albeit with a further 1.1% outflow of almost 13 tonnes. And while that took total silver holdings down to a 40-month low by weight beneath 1,155 tonnes, the value rose to a new record, topping $1.1 billion, £900 million, €1bn and ¥181bn for the first time.
Last time
the price of silver was as high in US Dollars as it was this May, back in February 2013 – eve of the post-financial crisis crash in gold and silver prices, their steepest drops since the start of the 1980s – BullionVault's Investor Index for the more industrially useful precious read 58.1, over 10 points higher from last month's reading.
But far from a rush for the exits, the gold and silver selling by Western investors in the first half of 2024 has signalled profit-taking and rebalancing. What's more, this spring's turnaround in precious metals investment sentiment is coming off a very low base.
It could give a big impetus to new price gains as this year's geopolitics and uncertainties unfold, helping strengthen the floor beneath bullion market prices as the much-delayed start to Western central banks cutting interest rates on cash finally arrives.
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