Gold News

Record Gold Price? Western Investing Shrinks 6th Month Running

Gold $2100 draws out yet more profit-taking...
GOLD INVESTMENT across Western economies continues to run negative by weight, with owners taking profits on gold as the price trades at new all-time highs, writes Adrian Ash at world-leading marketplace BullionVault.
With the boom in US tech stocks increasingly described as a bubble while Moscow and Nato talk openly about the threat of direct conflict, Western portfolios have started to look overweight risk and underweight insurance.
Yet 'safe haven' bullion's latest all-time highs have come amid a lack of demand to invest in gold from Western households and fund managers. Private investors using BullionVault – more than 9-in-10 of whom live in North America or Western Europe – have now been net sellers of gold for 6 months running, taking profit and rebalancing their portfolios as the precious metal hits new record prices.
Net of customer demand, BullionVault users have sold 1.6 tonnes of gold since their holdings set a peak above 48.2 tonnes at the end of August, raising $104 million (£85m, €99m).
But while customers holdings – all securely vaulted and insured in each client's choice of London, New York, Singapore, Toronto or most popular Zurich – have shrunk 3.4% by weight over that time, with 0.3 tonnes sold in February, the price of gold has risen by 8.0% in US Dollar terms (7.9% in both UK Pounds and Euros).
That has taken the value of those gold bullion investment holdings 4.1% higher to a fresh all-time record on Monday above $3.1 billion (up 4.0% in both UK Pounds and Euros to £2.4bn and €2.8bn respectively).
Chart of the Gold Investor Index, all data to February 2024. Source: BullionVault
As the price of gold slipped across February before surging to new all-time daily highs at the start of March, the number of gold buyers on BullionVault retreated 10.4% last month from January's 3-month high on Gold Investor Index data, while the number of sellers rose 9.2% from its 4-month low.
Together, that cut the Gold Investor Index – a unique measure of sentiment built solely on actual trading behaviour in physical bullion, on which any reading below 50.0 would signal sellers outnumbering buyers – by 0.9 points to 51.5, its weakest February reading in 14 years.
Will gold now hold or run to new record prices? Because gold pays no income, these new all-time highs could be vulnerable to central banks led by the US Fed holding interest rates higher for longer to try keeping a lid on inflation. But while a pull-back isn't guaranteed, any dip could prove good opportunity to buy into the underlying strength in gold.
Although gold's latest run to new record highs has come on a jump in speculative betting, physical demand for gold from the key consumer markets of China and India continues to run hot. Central-bank demand for gold also remains historically strong, and that's clearly helping drive up the gold price as sovereign nations favour the precious metal as a safe haven against the worsening geopolitical outlook.
Chart of the Silver Investor Index, last 3 years. Source: BullionVault
With silver prices declining in Dollars, Euros and UK Pounds across last month, the recent pattern of buying the dips, selling the peaks would have suggested a rise in silver bullion demand.
Yet February saw the number of silver buyers on BullionVault drop by more than one third, down 36.5% to the fewest since November. The number of sellers in contrast rose 20.4% from January's 11-month low.
Together that pulled the Silver Investor Index down by 3.1 points to 50.1, indicating that buyers outnumbered sellers by only a very small margin.
Trading activity in silver was also very nearly balanced in terms of weight, with selling across February topping demand by 0.1 tonnes to leave BullionVault user holdings just below 1,230 tonnes, 1.3% larger than December's 31-month low.

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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