Gold Investing Snaps 14 Months' Profit-Taking
Tuesday, 12/03/2024 10:32
Most gold buyers since July 2022...
GOLD's first monthly price drop since June saw Western investors buy more gold than they sold in November, snapping 14 months of net profit-taking on BullionVault,
writes Adrian Ash at the world's leading precious metals marketplace for private investment.
BullionVault now cares for $5.0 billion of gold, silver, platinum and palladium (£3.9bn, €4.7bn), all securely custodied, insured and audited for more than 110,000 users from 175 countries. Nine-in-10 of them live in North America or Western Europe.
First-time investing held strong in November as gold edged back from this fall's fresh all-time highs, with the number of new users running 59.5% above the 12-month average.
In total, more people chose to buy gold using BullionVault than any time in almost 2.5 years. That helped push up the
Gold Investor Index – a unique measure of 'revealed preference' in private-investor gold demand – to its highest since June 2023.
Now that the US election is decided, the investment risks for 2025 are becoming clearer, starting with currency-market volatility.
So gold's retreat from its latest all-time highs is giving would-be buyers the chance to start building a position. That's offsetting continued profit-taking by longer-term holders.
November saw more people choose to buy gold across the month than any time since July 2022, back when gold cost almost $900 less than today's $2640 per Troy ounce (£640 from today's £2090, €820 from €2525). Rising 8.2% from October's figure, that contrasted with the number of sellers falling 14.8% to the fewest in 3 months.
Together, that drove up the Gold Investor Index – now tracking the balance of buyers over sellers on BullionVault every month since October 2009 – to a 17-month high of 55.1, rising by 1.5 points.
Any reading above 50.0 signals more buyers than sellers. The Gold Investor Index hit a decade peak of 65.9 as the Covid Crisis struck in March 2020, and it set a series low of 47.5 on record-heavy profit taking this March.
November's post-election surge in the Dollar on the currency market helped knocked prices to invest in gold 3.0% lower from October's fresh record finish, which had marked the 4th new month-end high in a row. But gold priced in Euros edged only 0.2% lower as the price in UK Pounds dropped 1.6%.
The number of first-time users of BullionVault slipped by 13.5% worldwide from
October's 55-month high, but it ran 59.5% ahead of the 12-month average, led by continued strength in the UK, France and the Netherlands.
New US investors remained low in comparison, falling 20.0% from October's count and running just 18.2% above the 12-month average.
By weight, BullionVault users as a group were net buyers of gold for the first time in 15 months, albeit of only 17.5 kilograms. That took client holdings – all securely custodied, insured and audited in each user's choice of London, New York, Singapore, Toronto or most popular Zurich – up towards 44.2 tonnes worth $3.7 billion (£2.9bn, €3.5bn).
While that means customer gold holdings have shrunk 5.9% by weight so far this year, they have risen 21.0% in Dollar terms (21.2% in GBP, 26.7% in EUR).
The Silver Investor Index also jumped as the price of bullion retreated in November, with the number of buyers rising 3.3% to the most since July 2022 (when silver traded at $19.08) while the number of sellers sank by 36.8% to a 3-month low with its steepest drop since June.
That put the index at a 21-month high of 54.0, exactly 3.0 points higher from October, as the silver price dropped 8.6% in Dollar terms (-6.6% in GBP, -5.9% in EUR), its steepest fall since February last year.
By weight, BullionVault users added almost 8.0 tonnes of silver, the single heaviest 1-month inflow since January. That reversed 28.0% of the prior 2 months' liquidation and took client holdings to just above 1,154 tonnes worth $1.1bn (£897m, €1.0bn).
What next for precious metals? 2024 has been a remarkable year, repeating in miniature the consensus-defying jump in gold which continues to make it the best-performing asset of the 21st Century to date.
Extending that performance might sound tough, if not impossible. But no one saw gold and silver prices surging as they have since the year 2000, nor again in 2024. And for new investors, the price you missed doesn't matter.
What counts for today's buyers is what physical bullion's track record says it might do when the next crisis strikes. 2025 looks sure to bring new risks and volatility across the wider financial markets.
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