7th May 2013
The plunging gold price last month unleashed the strongest interest in physical gold from private households since the global debt crisis of late-2011, according to the latest Gold Investor Index from BullionVault.
The index, which measures the balance of buyers and sellers on BullionVault.com’s online gold exchange, jumped from 53.3 in March to 58.6 last month, hitting its highest level since December 2011.
The Gold Investor Index peaked at 71.7 in September 2011, and hit a 6-month low of 53.3 this March.
Adrian Ash, BullionVault’s head of research in London, said:”People buy gold when they fear trouble ahead, and gold’s safe-haven appeal continues to shine. Spring 2013’s new buyers are clearly looking beyond April’s price drop. Physical bullion remains undiminished as an escape from banking and credit risk, and as a defence against the long-term inflation threatened by quantitative easing, zero interest rates and big government deficits.”
BullionVault says a reading above 50 shows there were more gold bullion buyers than sellers, suggesting households lack confidence in the wider economy. April’s reading shows more people taking advantage of falling prices to purchase gold bullion.
The firm says that trading volumes for gold and silver were both at their highest since late 2011. Just over half of all new account fundings came from UK residents.
The firm notes that between Friday 12th and Monday 15th April gold priced in sterling witnissed its worst drop since March 1983, down 11.5%. It says net selling equalled 1% of existing users’ aggregate holdings during mid-April’s price crash. But it argues that among those self-directed households, the increased volume of sales was due more to profit-taking than panic selling. It adds that customers selling at prices higher than they had bought outnumbered those taking a loss in the ratio 2:1.
Ash adds: “As the Gold Investor Index shows, this surge in interest in gold is largely coming from new users – unleashing demand from people who want physical gold insurance for their money, but also at a better price. BullionVault enables you to sell as easily as buy – and selling was the initial response. Traffic, registration and account fundings have surged since the price slump. Unlike coin or small-bar buyers, our users can get the physical metal they want right now, already delivered inside the vault and without paying the higher “retail” premiums which the global dash for gold has created.”