Gold News

'Rolling Crisis' Sees Gold Investing Jump on Price Drop

Gold Investor Index hits 11-month high...
The STEEPEST drop in gold prices since spring last year saw bullion investing jump in May, reaching the most positive level in almost 12 months, writes Adrian Ash at BullionVault.
That's according to the Gold Investor Index, our unique measure of trading behaviour among users of BullionVault, the world-leading precious metals platform online and by smartphone.
Tracking the number of buyers versus sellers, the index would read 50.0 if there was a perfect balance between the two. Last month it rose by 2.0 points to 56.2, the highest reading since June 2021 and higher than its 12-month average for the first time since November 2020 following a run of profit taking.
May's jump in the Gold Investor Index came as the gold price made its sharpest retreat in 14 months, falling 4.4% in US Dollar terms to reach its lowest month-average price since January at $1839 per ounce.
Chart of the Gold Investor Index, last 3 years. Source: BullionVault
Gold prices are currently caught between inflation and interest rates, creating what analysts think looks like a trading range for the next few weeks if not months.
The worst devaluation of cash in four decades is buoying gold's appeal as a store of value, but its lack of income or dividends struggles against central-bank rate rises, albeit starting from zero as inflation runs to 8% per year and above.
Like the soaring cost of living, the terrible war in Ukraine has become part of the landscape for financial markets, creating a rolling crisis that's encouraging investors to buy gold on the dips as it undermines confidence in equities and the economy.
With the gold price retreating in May from spring 2022's near-record highs, global stock markets fell for the 4th in 5 months since New Year.
Here at BullionVault, the number of private investors choosing to buy gold – vaulted and insured in their choice of London, New York, Singapore, Toronto or Zurich – rose 16.2% from April, reversing half of that month's drop from March's 9-month high. The number of gold sellers in contrast fell 23.8% to the fewest since December.
Gold investment demand was also strong by weight, with customer purchases on BullionVault totalling almost a quarter-tonne net of client selling.
That grew the quantity of privately-owned gold bullion – stored and insured inside specialist vaults for the West London fintech's global user-base of more than 100,000 people – by half-a-per-cent for the second month running, taking it to 47.4 tonnes worth $2.8 billion (£2.2bn, €2.6bn, ¥361bn).
Chart of the Silver Investor Index, last 3 years. Source: BullionVault
On a month-average basis, silver prices fell 10.7% in May against the US Dollar, the steepest drop since March 2020 marked the crash phase of the global Covid Crisis for industrial and energy commodities.
Taking silver's average price across the month down to cheapest since July 2020 at $21.90 per ounce, that saw the number of silver buyers rise 18.6% from April while the number of silver sellers fell 24.3% to the fewest since December.
Together that drove the Silver Investor Index 2.4 points higher – repeating April's increase – to reach an 11-month high of 56.0.
Customer demand outweighed customer selling by 15 tonnes, taking total BullionVault client holdings of the more industrially-useful precious metal to a 5-month high of 1,235 tonnes worth $864 million (£686m, €808m, ¥111bn) after the New Year and spring's earlier price jump spurred profit-taking.

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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