A unique,
innovative tool for seeing just what private investors are doing in gold...
GOLD was up, up and away in September. But who was doing the buying?
New data we
released today here at BullionVault show that
private households across Western Europe and the US continue to join the bull
market. But their response to QE3 and the latest phase of the Eurozone crisis
is more measured – you might even say complacent – than the
recent price action alone suggests.
"There has
until now been a lack of hard data on self-directed retail investors in
gold," said Marcus Grubb of the World Gold Council, which is a
shareholder in BullionVault, at today's launch here
in London of our new Gold Investor Index.
"For instance,
the data we produce [the excellent Gold Demand
Trends] is
more at the macro level, including institutional and private wealth
management. This new Gold Investor Index is a real innovation – a
unique and useful addition to the data already available. It's a coincident
indicator of what private households are choosing to do with regards to
physical gold."
How so? BullionVault's new Gold Investor Index is a monthly data point based on actual trading on BullionVault, the world's largest provider of physical gold ownership
to private investors. Since launch in April 2005 it's now been used by more
than 42,000 private investors from 159 countries worldwide.
Almost 90% of BullionVault users live in the UK, US or Eurozone. So the
Gold Investor Index shows what the largest pool of private gold investors in
the developed Western world is doing with its metal – either buying more
or selling, or choosing to sit tight. They can all make that decision as they
choose using BullionVault's peer-to-peer exchange
online, a truly international market in physical bullion which is accessible
to people all over the world. You will not find a more reliable guide to the
wider retail-investment market in physical gold.
How does BullionVault's Gold Investor Index work? First, it takes the balance of net buyers (who
added to their holdings, and so includes new entrants) versus net sellers
over the last calendar month. The index then shows that figure as a
proportion of all existing gold owners to give a comparable series over time.
The index is rebased so that a perfect balance of buyers and sellers would
give a reading of 50.0.
In September this
year therefore, and as the chart shows, self-directed investors in the West grew
more bullish on gold. Rising from August's reading of 52.1 to 52.5, however, the
Gold Investor Index still lagged levels seen earlier this year, and it was
well below the series-record to date – the level of 71.7 hit in
September 2011.
So, September
2012's reading on the Gold Investor Index undoes any talk of a "gold bubble" amongst
Western households. Because the private investor response to QE3 and the
latest phase of the Eurozone crisis is far more measured than the last time
gold prices reached their current level. This may give succour
to central bankers and other policymakers hoping to buy time. The index
suggests households are less anxious about inflation or a currency crisis
than bank analysts and managed wealth advisors.
It's hard to find
any gold bears amongst professional investors right now. Amongst self-directed
retail investors too, sentiment towards gold is bullish. But hard
transactional data from the world's largest pool says they're not as bullish –
in aggregate – as they were earlier in the year. And sentiment towards
gold is way below the moments of extreme investor stress seen previously in
this financial crisis, such as late-summer 2011.
The new Gold Investor Index confirms what we're hearing from our friends and contacts
in the coin and small-bar business. Sales have been lacklustre
since spring. That may change, however, if the UK's over-valued Pound, the
Eurozone's unceasing crisis, and the US fiscal cliff crash into each other
towards New Year. Either way, the new Gold Investor Index will clearly show how
private investors respond.
Adrian Ash
BullionVault
Gold price chart, no delay | Buy gold online at live prices
Adrian Ash is head
of research at BullionVault – the secure, low-cost gold and silver market for
private investors online, where you can buy
physical gold today
vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2012
Please Note: This
article is to inform your thinking, not lead it. Only you can decide the best
place for your money, and any decision you make will put your money at risk.
Information or data included here may have already been overtaken by events
– and must be verified elsewhere – should you choose to act on
it.
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