Gold News

Record Day Crowns Record New Year Rush in Gold and Silver Investing

1st Feb almost matches all of Feb 2020 for new investors...
 
AFTER last year saw record numbers of people start investing in physical bullion for the first time, 2021 is seeing an unprecedented surge of new investors buying precious metals, writes Adrian Ash at BullionVault.
 
The leading online and smartphone platform for physical gold, silver and platinum, and now with client bullion worth a record $3.8 billion (£2.8bn, €3.1bn, ¥402bn), we saw last month mark the strongest January in our 15 years of business both for the value of gold investing demand and for the number of new users.
 
That climaxed with a record weekend for first-time account openings. The first day of February then set a new all-time record for new accounts opened in one day.
 
In fact, Monday very nearly matched all of February last year.
 
So while this current surge began long ago, and while last year's Covid Crisis spurred record demand for precious metals, we're now seeing unprecedented levels of new interest.
 
More people are adding physical bullion to their savings and investments than ever before.
 
Gold demand last month outweighed client selling by 0.4 tonnes, setting a January record of of $24.7m in net inflows (£18.2m, €20.3m) and beating both January 2008 – just after Northern Rock crashed – and the Eurozone debt crisis 4 years later.
 
Together with the strongest New Year demand for silver bullion since January 2012, plus continued demand for platinum – also primarily an industrial precious metal, and also with a wide variety of applications across green-energy technologies and electronics – that has taken the value of all client property up 53.0% from 12 months ago in US Dollar terms (up 43.2% in Sterling, 38.3% in Euros, 47.4% in Yen).
 
Client holdings of silver this weekend broke through $1 billion by value for the first time (£732m, €828m, ¥105bn).
 
Chart of Gold Investor Index, all data. Source: BullionVault
 
Tracking the number of buyers versus sellers, the Gold Investor Index rose 1.4% last month, reaching 57.8 and setting its highest January reading since 2011.
 
A reading of 50.0 indicates more people buying than selling. Last March's sudden start to the global Covid Crisis saw the Gold Investor Index hit 65.9, its highest in 8.5 years.
 
Driving last month's strength in the index was the strong count of first-time users. January 2021 saw account openings on BullionVault beat the same month last year by 133.9% worldwide, some 127.3% ahead of the 10-year monthly average.
 
UK and US investors are leading this surge, with their count of new precious-metal investors beating January last year by 364.0% and 242.9% respectively.
 
February then began with a new 1-day record for global account openings, matching 87.9% of last February's full-month total.
 
What gives?
 
New Year tends to mark a strong period for new gold and silver investing, because people make new resolutions to save and also look to rebalance their investments to spread risk. January's new account openings have been bigger than the following 12-month average 7 times in the last 10 years.
 
But after 2020 brought record new interest amid the first dreadful wave of the Covid pandemic, the urgency in holding a little gold or silver now seems greater than ever, especially among US and UK investors.
 
The grim outlook for economic recovery is combining with record low interest rates, record QE money creation and record government deficits to boost physical bullion appeal's as a time-tested store of value.
 
Chart of the Silver Investor Index, all data. Source: BullionVault
 
The Silver Investor Index meantime rose 10.3% in January to a 4-month high of 59.8 – the highest New Year reading on BullionVault's 10-year series.
 
Last week's posts urging people to buy silver on Reddit have seen the price spike 20% since Wednesday night. Clearly its volatility and speculative appeal has led this surge, and the 2021 case for silver is solid both on the financial background and especially on the outlook for strong industrial demand from green-energy and 5G telecoms installation.
 
While the flood of new interest in silver has emptied coin shops, there's plenty of metal in wholesale storage, and any talk of a 'shortage' will in truth refer more to trucking and handling capacity rather than physical stockpiles.
 
Anyone rushing into buy silver today should beware high mark-ups on coins and small bars, because some dealers may exploit the situation as they struggle to meet demand. Buying outside the professional market also means UK and European investors have to pay VAT sales tax. That adds another 20% you won't get back on selling – a cost which people choosing to use BullionVault to buy silver avoid.
 
That benefit, plus the instant settlement...24/7 access...and market-beating low costs and trading spreads available to all users on BullionVault...no doubt explains why our client-base is expanding at this new record clip. But the current surge of interest in precious metals isn't confined to our business, and while it may prove a blow-off top in the surge of new interest starting 12 months ago, the 2020 cohort of new gold, silver and platinum investors is proving just as committed so far as did the flood of new buyers during the global financial crisis' peaks of 2008, 2009 and 2011.
 
The long-term case for buying, holding or trading and managing a chunk of physical bullion didn't start with Covid-19 last year, much less with the Reddit Ramp last week. It won't end with them either.

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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