Gold News

Gold Investing Does What Gordon Brown Didn't

Gold investing strong as prices slip in Spring 2019...
IF GOLD PRICES fall, is it better to sell or buy? asks Adrian Ash at BullionVault.
Back in May 1999 the UK Government gold sold at what proved a big bear market low.
Here in spring 2019 private investors are taking a different tack.
"Gold investing rises as prices fall" isn't a story you'll read most places. Nor will most dealers tell you their customers are taking profit on a rise.
But that's how Western private investors have behaved as a group pretty much unbroken since Donald Trump won the White House in late 2016.
New Year 2019 saw gold prices jump and gold investing retreat among private households.
March and now April, in contrast, saw gold prices slip back from those multi-month highs. In response, private investors have shown rising demand and solid interest.
With gold prices slipping for a second month running in April, the Gold Investor Index – a unique measure of behaviour among BullionVault users, the Western world's largest pool of gold investors – stabilized at March's 6-month high, reading 54.5 once more.
Now used by more than 75,000 people across 175 countries, BullionVault offers gold trading in the client's choice of Dollars, Euros, Sterling or Yen. Nearly 9-in-10 of its customers live in Western Europe or North America.
By weight, these investors in April were net buyers of gold for the first time since November, adding 76 kilograms (0.2%) to their total holdings, now at 38.9 tonnes.
Today marks the 20th anniversary of Gordon Brown's infamous gold sales decision at the UK Treasury, more than halving the national reserves of bullion at the lowest prices in two decades between 1999 and 2002.
So it's telling that private investors are using the current drop in prices to buy gold, rather than sell it, as global stock markets teeter at new record highs and the mountain of government, corporate and consumer debt returns to the headlines.  
Perhaps the single worst investment decision of modern times, Brown's move came as the Tech Stock Bubble peaked and many other Western central banks also cut their holdings.
Since then the global financial crisis has plainly made the case why private investors should hold a little gold as insurance, while emerging-market nations led by Russia and China have dramatically added to their national gold reserves.
April saw Euro investors show the heaviest ratio of gold buyers to sellers for the first time since August, overtaking the UK after British investors topped that ratio in each of Jan, Feb and March ahead of what should have been Brexit.
In total, the number of private investors buying gold across April fell 6.4% from March's figure, but the number of sellers fell more than twice as hard, down 14.0% to the fewest since September.
The last time that gold bullion saw so few people choosing to sell, it averaged less than $1200 per ounce, almost $90 below April's average price. That suggests private investors as a whole anticipate higher prices ahead and expect the underlying trend to continue rising.
Investing in silver was more muted than in gold despite the grey metal also falling to its lowest month-average price since December.
The number of silver buyers on BullionVault across April fell 16.5% while the number of sellers dropped only 5.0% from March's figure.
That still left the Silver Investor Index little changed however from the prior month's 6-month high, slipping in April to 52.1 from 52.9 in March.
For the third month running, Eurozone investors marked a heavier ratio of silver buyers to sellers than either the US, the UK, or the rest-of-the-world.
Like gold, silver holdings also grew by weight, expanding 0.4% to a new all-time record on BullionVault of 756.9 tonnes.
Right or wrong, in short, private investors as a group are buying this dip in precious metals.

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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