Gold Investors Take Profit Again at Record Prices, Silver Too
Tuesday, 10/01/2024 14:27
But gold and silver bullion investments still hit record value...
GOLD and SILVER's latest price surge to fresh all-time and multi-year highs has spurred yet more profit-taking by private investors on world-leading marketplace BullionVault,
writes Adrian Ash at the West London fintech, now caring for $5.0 billion of precious metals for over 100,000 users in 175 countries worldwide.
But while silver investment sentiment has also turned negative for the first time since May, sentiment towards gold remains positive, and the value of investors' gold and silver holdings has reached a fresh Dollar record as outflows are tempered by an upturn in first-time buyers in the USA and UK.
Indeed, gold investment buyers have now outnumbered sellers for six months in a row, even as
gold prices run to fresh record highs.
But any notion that 'safe haven demand' has pushed the market to these new record highs misses the fact that it's
speculators in gold futures and options driving precious metals prices higher, rather than physical buyers.
Because with global stock markets continuing to rise and a US recession delayed if not averted, long-time bullion owners are only too happy to keep taking investing profits at these new record prices.
The price of gold typically falls in September, as
analysts and pundits rushed to point out this time 4 weeks ago.
But last month gold broke that pattern with its steepest September jump since 2012, rising 4.6% in Dollar terms, 2.7% in Sterling and 3.8% in Euros while setting a fresh daily record 7 times for UK investors at London's bullion market auctions – the global price benchmark – and 9 times for US and Euro investors.
In response, and tracking the number of buyers over sellers on BullionVault – which finds 9-in-10 of its global customer base in North America and Western Europe – the Gold Investor Index fell 0.8 points to a 5-month low of 52.0, a series low for the month of September.
This unique measure of market sentiment would read 50.0 if the number of buyers exactly matched the number of sellers.
The Gold Investor Index peaked at a decade high of 65.9 as the pandemic took hold in March 2020, and it set a record low of 47.5 this March – signalling more sellers than buyers for the first time since June 2019 – when prices began 2024's run of new all-time highs.
Underpinning gold's dramatic uptrend, the start of US interest-rate cuts is now adding to the support coming from worsening geopolitical division and the risk of major-power conflict around the Russia-Ukraine and Middle East wars.
And while existing gold investors continue banking some of their gains to rebalance their portfolios, the pace of selling remains measured even at gold's fresh all-time highs, and new investment buyers continue to enter the market.
By weight, investors using BullionVault cut their combined gold holdings by 353 kilograms last month – the heaviest net liquidation since April's record 992kg outflow – down to a new 50-month low beneath 44.5 tonnes.
But by value, those holdings – all securely stored and insured in specialist vaults in each client's choice of London, New York, Singapore, Toronto or most popular Zurich – grew 3.8% to a new record above $3.7 billion (+2.0% to £2.8bn, +3.0% to €3.3bn, both also a new record).
September's count of new users worldwide at BullionVault slipped 6.5% from August's 4-month high, but it came in 118.4% above the same month last year and rose 29.0% from its prior 12-month average.
Within those numbers, first-time investors in the US and UK rose to the highest monthly count since April, up 20.0% and 5.5% respectively from August's figure and coming 75.6% and 44.6% above their prior 12-month average.
New users in the Eurozone in contrast fell 25.6% month-on-month, led by a 36.0% drop in France and a 45.5% fall in Italy, with continued weakness in Germany seeing the 20-nation currency union as a whole bring only 2.5% more new users in September than the prior 12-month average.
So like with this spring's brief rally in Italy and then France, the current jump in US and UK first-time bullion buyers looks specific to short-term domestic uncertainty. November's US election could go either way, while the UK Budget due at the end of this month is raising anxiety among consumers, business and investors over the new Labour Government's tax and spending plans.
Silver prices have also tended to drop in September, falling in 8 of the 10 years to 2023.
But like gold, the more industrially-useful precious metal leapt in price last month gaining 8.3% in Dollars – and hitting its highest since Christmas 2012 – while rising 6.5% in UK Pounds and 7.4% in Euro terms.
In response, the Silver Investor Index fell hard, down 4.2 points to a 4-month low of 48.9 and signalling more sellers than buyers for the first time since May. That was when the Dollar price had risen through $32 per Troy ounce for the first time in over 11 years, a level it re-took but then lost again last month.
Seizing on silver's latest spike, investors sold 12.0 tonnes more of the precious metal than they bought across September as the price hit new 12-year highs. That marked the first net liquidation since May, and it cut client holdings to 1,167 tonnes.
Worth 4.3% more by Dollar value from August however, that set a new record for BullionVault users' silver holdings at $1.1bn in terms of the US currency, but it missed a new record in Sterling or Euros, rising 2.4% to £865m and 3.3% to €1.0bn, both below May's peak value.
Still, with prices rising faster than the pace of investor selling, the total value of BullionVault's client holdings overall rose to a new record in all 3 currencies in September, reaching $5.0 billion (£3.7bn, €4.4bn) when counting the gold, silver, platinum and palladium, all securely stored and insured in specialist vaults, belonging to more than 100,000 users from 175 countries.
What comes next? Looking ahead, it's hard to believe that last week's gold tops above $2680 and £2000 and €2400 per Troy ounce will mark a long-term peak like New Year 1980, summer 2011 or even summer 2020 did.
That's because, contrary to all the talk about 'safe haven demand', Western investors have been selling or ignoring precious metals, not buying the stuff.
Imagine what happens when they get involved again. The next $5 billion might arrive a lot faster than the first.
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