New Gold Investing Doubles, Profit-Taking Hits Record
Tuesday, 4/04/2023 12:09
Gold's new all-time highs spur 1% liquidation in Q1...
NEW GOLD investment surged on March's banking scare, with the number of people buying precious metals for the first time doubling from the month before,
writes Adrian Ash at BullionVault, the world's largest marketplace for private investors to own and trade physical bullion.
As gold prices jumped to set fresh month-end records in Dollars, Euros, Sterling and Yen, new account openings on BullionVault rose 94.8% from
February's 45-month low and grew 41.3% above the prior 12-month average to reach the most since Russia's invasion of Ukraine
spurred a jump in March 2022.
But last month's surge in gold prices also spurred a jump in profit taking among BullionVault's existing global client-base, leading to a total of $135 million-worth (£112m, €126m, ¥18.2bn) of securely stored and insured gold changing hands on its trading platform across the month, up by 123.9% from February's figure (122.8% in UK Pounds, 123.7% in Euros, 125.6% in Yen) to the heaviest volume since last March.
Whether or not this spring's banking scare proves a one-off, the underlying strength in prices to invest in gold looks set to continue, with a new wave of private buyers joining the
record bid from central banks while
solid demand from Asia's jewelry consumers puts a rising floor beneath the market.
Including existing users of BullionVault, this March saw more people start or add to their physical gold investing than any month since October.
But it also saw a record number of people choose to sell the precious metal as its price rebounded by 8.5% in Dollar terms (6.3% in Sterling, 6.0% in Euros, 5.5% in Yen) to finish last week at a new all-time month-end record above $1979 per Troy ounce (£1598/oz, €1818/oz, ¥8465 per gram).
Together, the rise in buyers and the leap in sellers pushed the Gold Investor Index – a unique measure of private activity in physical bullion – down 2.6 points to 51.9. It would read 50.0 if the number of sellers across the month exactly matched the number of buyers, and it averaged 54.5 across the 12 months ending February.
Setting a series peak of 71.7 in September 2011, depths of the global financial crisis, the index hit 65.9
amid the Covid crash of March 2020.
From talking to new gold buyers, certainty of ownership is more important than price right now. For existing investors in gold, the metal is working just as they'd hope, spreading risk from their wider portfolio and offering a profit to offset losses elsewhere.
By weight, investor demand to
buy gold very nearly doubled last month, rising 95.8% from February while the amount sold jumped by 141.3% and overtook the quantity bought.
That saw the total stock of gold now securely stored and insured for BullionVault clients in each user's choice of London, New York, Singapore, Toronto or Zurich shrink by 0.4% to 47.6 tonnes, down by 0.5 tonnes from end-December's record high to the smallest in 9 months and reducing by 1.0% across the first quarter of the year.
That's still more gold than most of the world's
central banks hold in reserve, larger than all but 12 of the 158 exchange-traded
trust funds backed by gold worldwide, and worth a new BullionVault end-month record of $3.0 billion (£2.4bn, €2.7bn, ¥414bn).
Silver prices meanwhile rebounded even faster than gold in March, rising 16.4% in Dollar terms (13.6% in Sterling, 13.5% in Euros, 17.3% in Yen) to finish at $23.89 per ounce at London's wholesale-market benchmarking auction (£19.30/oz, €21.97/oz, ¥102 per gram).
The number of silver buyers on BullionVault rose to the most since July while the number of sellers leapt to the most since December, back when prices were last this high.
Together that saw the Silver Investor Index drop 2.0 points to 52.4, in line with its prior 12-month average of 52.7.
Hitting a record low of 47.5 last December as sellers outnumbered buyers, the Silver Investor Index set its record high of 75.1 in March 2020, as BullionVault users seized a plunge in prices amid the Covid Crash in energy and industrial commodities.
Despite last month's steep price rise, March 2023 saw the heaviest silver demand by weight, net of client selling, since June 2021 at more than 16 tonnes.
That took the total quantity of the industrially-useful precious metal held for BullionVault users in each client's choice of London, Singapore, Toronto or Zurich to 1,263 tonnes, larger by 0.9% across the first quarter of 2023, worth $970m (£783m, €892, ¥132bn), but still 0.3% smaller than end-October's record tonnage.
The first quarter of 2023 has been another roller coaster for precious metals. Silver screamed loudest, marking its steepest 1-month drop since the fall of 2020 in February before making its steepest rebound since December 2020.
All told, that left BullionVault – launched in April 2005 – now caring for a record $4.0 billion (£3.3bn, €3.7bn, ¥559bn) of gold, silver, platinum and palladium for over 100,000 users from 175 countries worldwide.
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