Price wise' gold investors use July's drop to build record-high holdings

New figures show

Private investors seized on July’s lower gold prices to grow their physical holdings of the precious metal at the fastest pace since January, new data from BullionVault show today.

Users of BullionVault.com added more than a third of a tonne (361kg) to their aggregate holdings last month, almost twice the quantity they had sold as a group over the previous 3 months of light profit-taking (192kg).

That took the total quantity of gold now belonging to users of BullionVault – the world’s largest precious metals market online – to a new record of 38.1 tonnes, worth £1.2 billion and outweighing all but the 48 largest national gold reserves.

Some 2.9 tonnes (8.1 per cent) greater than this time last year, that’s more than 12 times the quantity held by private investors using the West London fintech company’s services 10 years ago (3.1 tonnes), when the global financial crisis first broke as international money markets froze at the start of August 2007.

With each user choosing from 5 global locations when they buy, some 72.5 per cent of client gold property is today stored in Zurich, Switzerland, with 19.0% held in London – heart of the world’s wholesale bullion market – and the rest split between New York, Singapore and Toronto.

Adrian Ash, director of research at BullionVault, said: “Buying gold proved a smart move when the financial crisis began 10 years ago this month. Such turmoil looks very distant to most investors today, but those wanting to buy gold as a form of insurance are increasingly wise on price as well, buying the dips and selling the peaks against an underlying trend of steady accumulation.

“This strategy echoes how Asia’s price-sensitive households trade gold. A growing number of Western savers are seizing price drops as an opportunity and holding back or taking profit when prices rise. Where Indian and Chinese savers find religious and cultural reasons to keep building their gold holdings, North American and European households have the plain example of the financial crisis starting in 2007.”

Looking at the number of individual gold buyers and sellers, July saw the Gold Investor Index rise as month-average prices fell, increasing from June’s 54.1 to a reading of 55.1 as gold slipped 1.9 per cent against the Dollar to $1236 per ounce.

That marked the 7th month running in which private-investor sentiment towards physical gold – as measured by the balance of net buyers over net sellers on the world’s largest precious metals market online – moved in the opposite direction to prices.

This is the longest stretch of such price sensitivity on BullionVault’s series, beginning in October 2009.

The Gold Investor Index would read 50.0 if the number of net buyers equalled the number of net sellers on BullionVault across the month. It touched half-decade lows at 50.5 as interest in gold investing bottomed around New Year 2015, and jumped to a 5-year high of 59.3 on last November’s US presidential election.

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