'Price Trumps Trump' as Gold Investing Hits Bear-Market Lows
Tuesday, 5/01/2018 09:02
2015 levels in Google search, first-timers and the total number of gold buyers...
GOLD INVESTING among Western households has fallen to the weakest levels since the metal hit its bear-market lows at the end of 2015,
writes Adrian Ash at BullionVault.
Used by 71,500 people worldwide since launching in 2005, BullionVault now cares for $2.0 billion of gold, silver and platinum (£1.5bn, €1.7bn, ¥221bn) on behalf of its clients, all stored in specialist vaults in London, New York, Singapore, Toronto and Zurich.
But with gold prices averaging a 0.8% gain last month in US Dollar terms, the number of people starting or adding to their gold holdings fell 13.5% in April from March's figure.
In total, the number of buyers fell to its lowest level since gold prices turned higher from 6-year lows in January 2016.
The number of first-time investors also fell for the third month running in April, dropping 28.5% from the previous 12 months' average to reach its lowest level since December 2015.
Internet searches for the phrase "buy gold" have also sunk worldwide according to separate
data from Google Trends, bouncing slightly in April after matching the low of October 2015 – itself the lowest level since before the global financial crisis began in 2007.
Bottom line? Despite the US President's Twitter attack on tech stocks, his worsening 'trade war' with China, and the US-led airstrikes against Russia's ally Syria last month, interest in physical gold has fallen to bear-market lows among private investors.
For gold investing right now, price continues to trump Trump. It also outweighs the signs of rising inflation.
But while urgency is lacking as the stockmarket pushes higher, the underlying trend for gold prices points higher. Since the last time new interest and trading activity among private investors was this poor, gold bullion have gained 25%.
For the time being however, and with private-investor interest in physical gold bullion falling back as US Dollar prices rose in April, sentiment extended a price-sensitive pattern now holding firm since Donald Trump won the US election in November 2016.
In contrast to the number of buyers, the number of sellers rose 11.4% from March's figure, reaching its largest level since January.
Together that pulled the Gold Investor Index – a unique measure of private sentiment towards investment bullion, based solely on BullionVault client trading – down from 53.7 in March to 52.5 in April, showing the weakest private-investor interest in gold bullion since August.
The Gold Investor Index peaked at 71.7 in September 2011 as gold prices set their current record highs, and reached a low of 50.5 in the winter of 2014/15.
The index would read 50.0 if the number of net buyers and net sellers across the month matched each other perfectly.
All told, the number of people changing the size of their gold holdings across the month fell for the third time running in April, down 5.9% from March.
That number, as a proportion of all gold owners at the start of the month, fell below 8.9%, its lowest level since December 2015.
April 2018 marked the 16th month out of the last 18 that the Gold Investor Index moved in the opposite direction to US Dollar gold prices.
With silver prices rising like gold to gain 0.8% in US Dollar terms across last month, the number of silver buyers also fell in April, down 21.9% from March to the lowest level since October, while the number of sellers rose 6.0%.
Together that pulled the Silver Investor Index down from 53.4 to 51.9, its lowest reading since January.
By weight however, silver demand was positive overall, with BullionVault users adding 1.2 tonnes to take their total holdings to a fresh record at 713.8 tonnes.
Gold in contrast saw net selling, cutting client holdings to 38.7 tonnes, down 98 kilograms from end-March's record.
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