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Demand for gold is rising as investors seek a safe haven from market chaos

Demand for gold is rising as investors seek a safe haven from market chaos

  • According to BullionVault, demand has been strongest this month since early 2009
  • The number of investors opening new accounts is almost three times higher than last year
  • In the past year, the price of gold in pounds has increased by almost 30%

No one knows exactly where the gold price is going – up or down – but the precious metal’s reputation as a safe haven in difficult times is leading to record investor demand.

BullionVault, a precious metal trader, says investor demand for gold has been strongest this month since the depths of the global financial crisis in early 2009.

The number of investors opening new accounts is said to be almost three times higher than last year’s average – and more than for serious gold purchases in the past, such as during the Brexit votes of 2016 and September 2011 when the euro crisis raged and London was involved in riots.

BullionVault, a precious metal trader, says investor demand for gold has been strongest this month since the depths of the global financial crisis in early 2009.

BullionVault, a precious metal trader, says investor demand for gold has been strongest this month since the depths of the global financial crisis in early 2009.

Adrian Ash, research director at BullionVault, says, “With acute economic dislocation that is crushing stock prices, gold is gaining popularity as a rare, physically indestructible asset that people worldwide use to store value in times of crisis.”

In the past year, the price of gold in pounds has risen by nearly 30 percent to around £ 1,281 an ounce. This is despite the fact that since the coronavirus crisis, the price has fallen slightly from its February peak of £ 1,304 an ounce.

Most investment experts believe that the asset class remains attractive. Vincent Ropers is co-manager of investment fund Wise Multi-Asset Growth, which invests in a mix of shares, fixed-income bonds, alternative investments and cash.

He says, “In volatile times, gold remains one of the few areas where investors can find cover. With the level of fiscal stimulus that we are beginning to see around the world – a measure that will eventually be inflationary – gold also offers good hedging. ‘

Ropers believes that the current price volatility should not deter investors. “Price volatility is not uncommon in the early stages of an economic downturn,” he says.

“In the 2008 financial crisis, for example, the gold price did not immediately respond to the start of a three-year recovery, in which the price rose by more than 150 percent.”

Sebastien Galy, an economic strategist at Nordea Asset Management, agrees. He believes that gold should “do well” in “an environment where central banks print money on a large scale worldwide” and that inflation will rise.

“It’s the kind of story gold feeds on,” he adds.

Gold can be purchased from traders such as Baird & Co, BullionVault, Sharps Pixley, The Gold Bullion Company, The Pure Gold Company, The Royal Mint and Spink.

Purchasing £ 10,000 of gold online via BullionVault initially costs 0.5 percent, plus 0.36 a year to save. For sales after a year, the selling costs are 0.5 percent. Total cost of around £ 136.

A one-ounce minted gold bar (precious metal) from The Royal Mint currently costs around £ 1,380. It comes free, although The Royal Mint offers buyers the choice to store the gold safely in the vaults.

For gold worth £ 10,000, the annual vault charge would be around £ 120, although it could be higher if gold prices go up. Last week, a note on The Royal Mint’s website warned of delayed delivery times.

Rather than buying physical gold, investors can purchase an exchange-traded commodity-traded commodity whose performance follows the gold price.

An example of such a vehicle is iShares Physical Gold, which is included in the list of the 60 most important investment funds of asset manager Inter-Active Investor.

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