Summer 2018 sees solid private-investor sentiment...
SUMMER 2018 saw buying gold become more popular among private investors than any time since Donald Trump's election as US president,
writes Adrian Ash at BullionVault.
ETF gold funds in contrast continue to shrink, and speculative betting against gold has set
new record levels of bearishness.
But private investors managing their own money keep bucking that trend, using these price falls as an opportunity to buy gold and build their personal holdings at lower cost.
With gold prices
falling for the 5th month running – down to their lowest monthly average in US Dollar terms since January 2017 at $1201 per ounce – the Gold Investor Index held near July's spike to a 21-month high of 56.8, slipping to 56.0 in August.
Built solely from actual trading activity among BullionVault's global client base of more than 72,000 investors, the index would read 50.0 if the number of people buying gold across the month matched the number of sellers exactly.
The Gold Investor Index peaked at 71.7 when gold prices set all-time record highs in September 2011, and fell to 50.5 during the winter of 2014/15.
Across June, July and August this year, the index averaged a reading of 55.9, higher than any 3-month period since the one ending January 2017.
Choosing to buy gold at these cheaper prices could prove smart if this year's worsening political, economic and emerging-market risks finally dent the over-stretched bull run in equities.
This month's 10th anniversary of the Lehman's crash will also remind investors that gold has a
solid history of off-setting extended periods of stockmarket losses.
Trading gold bullion bars stored securely in each client's choice of London, New York, Singapore, Toronto or Zurich, the number of BullionVault users who ended last month with more gold than they began it slipped 5.4% from July's 20-month high, while the number of sellers rose 14.1% from
that month's 10-year low.
The number of first-time investors meantime rose to its strongest monthly level since February this year, jumping 46.3% from July and led by growth in the UK amid fresh wrangling over March 2019's Brexit from the European Union.
The Silver Investor Index meantime edged higher for the third month running in August, rising from 53.7 to 53.9 as prices fell 4.5% to the lowest monthly average since January 2016 at $15.01 per ounce.
The number of silver buyers rose 9.0% to the greatest since March, but the number of sellers rose faster, up by 14.7%.
Overall, the number of people trading silver rose in August above 10% of all existing silver owners for the first time in 5 months.
In gold, trading volumes rose 31.7% from the previous 12 months' level, with BullionVault users trading a daily average of 43 kilograms between them, worth $1.7m (£1.3m, €1.4m, ¥187m).
Silver holdings were unchanged by weight at month's end, with BullionVault users owning 727 tonnes of the metal between them.
Gold holdings fell sharply however, erasing most of July's inflow to a new all-time record high above 39 tonnes with a net 301kg liquidation as a handful of larger clients sold out.
BullionVault users – 89% of whom live in North America or Western Europe – began September owning $1.5 billion worth of gold bullion between them (£1.2bn, €1.3bn, ¥166bn), more than is held by most of the world's central banks.
As a group they also held a further $343m (£264m, €294m, ¥38bn) in physical silver and $15m (£12m, €13m, ¥1.7bn) of physical platinum, added to BullionVault's online order board in March 2017 in partnership with the mining-backed World Platinum Investment Council, and available throughout this month at 0% buying commission.
