Gold News

Gold Trading Doubles, Sellers Outnumber Buyers 1st Time Since 2010

Gold price's 6-year highs see record profit-taking...
PRIVATE INVESTORS trading gold on the world's largest bullion market online sold the precious metal at an unprecedented pace in June, writes Adrian Ash at BullionVault, locking in profits as gold prices jumped to the highest in more than 6 years.
Daily gold trading volumes doubled to £2.4m per day as investor selling outweighed buying almost 2-to-1.
BullionVault then saw a new record client trade made by smartphone on Monday 1 July, with $1.4m of gold sold using an iPhone.
Net of customer demand, users of BullionVault – the peer-to-peer exchange now used by more than 75,000 people worldwide and caring today for $2.1 billion of securely stored precious metals (£1.7bn, €1.9bn, ¥228bn) – sold more than three-quarters of a tonne of gold in June.
That marked the heaviest 1-month liquidation since the London-based fintech leader opened in 2005.
But it still left 38.0 tonnes of gold – down 2.0% from end-May – stored across each client's choice of London, New York, Singapore or most popular Zurich, Switzerland, worth a record in UK Pound and Euro terms.
Altogether this stock of privately-owned gold was worth a total of $1.7bn at Friday afternoon's London benchmark price, the most in US Dollar terms since end-Jan 2013 and new Sterling and Euro currency records at well over £1.3 billion and €1.5bn respectively.
BullionVault saw the number of private investors choosing to buy gold across June rise 7.4% from May's 1-year low.
But for the first time in almost a decade the number of sellers was greater, leaping 122.0% to reach the most since prices spiked on the Brexit referendum shock of June 2016.
Together that saw the Gold Investor Index – a unique measure of private investor action in physical bullion – make its steepest plunge in almost 2 years, down 5.6% from 52.0 to 49.1
The first sub-50 reading since February 2010 (then at 48.8) that was weaker than the Gold Investor Index's lows of 50.5 recorded at New Year 2015 during gold's bear market after the global financial crisis receded.
Breaking 6-year price highs in June, gold has also broken the dam on investor holdings, unleashing a wave of profit taking.
With prices moving so high so quickly, it's sensible that investors already using gold to spread their risk now think about rebalancing their portfolio. But the number of investors still not holding any gold for insurance is far greater. Summer 2019 is seeing new interest in gold tick higher from a very low base.
The number of people using BullionVault for the first time in June jumped 25.8% worldwide compared to May – the weakest month since just before the Lehman Brothers' phase of the global financial crisis in 2008 – but that was still down by 24.5% from the prior 5-year monthly average.
UK new interest jumped 38.7%, US +19.0% and Eurozone +14.3% for the month.
Gold prices rose 5.9% across the month of June in Dollar terms – the strongest gain for US investors since February 2016 – led by a surge in speculative betting on futures and options contracts as interest-rate expectations collapsed on the back of 'dovish' comments from the central banks of the US, Eurozone, Japan and UK.
Priced in Sterling gold leapt 7.1% and it averaged 4.8% more in Euro terms than in May, the strongest 1-month gains since July 2016.
By weight, investor demand on BullionVault jumped 45.3% from the previous 12-month average to reach more than 0.9 tonnes. But selling by existing owners jumped 3 times faster, up 136.3% from the previous 1-year average to total 1.7 tonnes.
On average the company's technology enabled £2.4m of gold to change hands each day in June ($3.1m, €2.7m, ¥332m), up more than 95.8% from the previous 365-day average.
Last Tuesday, 25 June, gold trading volumes peaked above £6.0m ($7.6m, €6.7m, ¥0.8bn) – the most since Donald Trump's White House victory in the November 2016 US election – as gold jumped to set multi-year or new record highs against all currencies.
Nearly half of June's sellers first bought between 2014 and 2019. For that 48.6% of sellers, gold at June's peak showed a rise of 16.8% from their average entry price in US Dollar terms, 16.3% in Euros, and 25.9% in British Pounds.
Monday 1 July then saw a new record client trade made using BullionVault's smartphone apps, as a customer sold 32 kilograms of gold (1,028 Troy ounces) for $1.4m (£1.1m, €1.3m, ¥152m) using their iPhone.
Silver prices also rose in June, erasing some of the cheaper metal's recent losses and gaining at the fastest pace since January with a 2.5% jump in Dollars, 1.6% in Euros and 3.9% in Sterling.
On BullionVault the number of people buying silver across the month rose by 13.1% from May to reach the most since last September. But the number of silver sellers rose 39.6% to its most since January.
That took the Silver Investor Index down from 52.6 to 52.0, its lowest since February.
Net of client selling, BullionVault users' silver demand totaled 2.1 tonnes, taking holdings of the cheaper precious metal up to their 8th new all-time record of the last 12 months at 759 tonnes.
Pundits online are wondering why silver is lagging gold so badly, failing to attract investors. But in the physical market of private investors, trading bullion at the tightest prices and with the lowest costs plus instant settlement, quite the opposite applies.
Gold's price surge is meeting heavy profit taking. Silver's tepid 2019 gains so far are seeing continued inflows. So among private investors at least, and in contrast to leveraged speculators trading Comex derivatives, the strategy seems to be buy low, sell high.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium 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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