Private investors have sold more physical gold than they’re buying as prices set new all-time highs, data from world-leading platform BullionVault shows today, with people taking profits at the fastest pace in more than four years to refute claims of a ‘gold rush’ into the safe-haven metal amid the dreadful violence in Israel and the ensuing bombardment and invasion of Gaza.
“With gold making its fourth attempt at the $2000 level on such awful news, it’s hard to deny that gold loves a crisis,” says BullionVault director of research Adrian Ash. “But contrary to any headlines claiming there’s some kind of gold rush right now, profit-taking continues in physical bullion, and it’s speculative betting in the futures and options market which looks more likely to determine the direction of prices near term.”
BullionVault users sold almost half-a-tonne more than they bought as a group last month, marking the third heaviest net selling since the London-based fintech – now caring for more than £3.3 billion of gold, silver, platinum and palladium for more than 100,000 users worldwide – first enabled private investors to trade wholesale bullion at live prices 24/7 in April 2005.
The number of people choosing to buy gold across last month rose by 16.4% from September’s 4-year low, while the number of sellers jumped by 69.3%, the sharpest rise since and also reaching the most since March, when the ‘mini crisis’ in regional US banking sent gold prices soaring towards new all-time highs.
Together, that pushed the Gold Investor Index – a unique measure of actual trading behaviour among the world’s largest single pool of private investors in physical precious metals – down by 1.4 points to 51.8, the lowest since January’s 3.5-year low of 50.6.
A reading of 50.0 would signal that the number of people starting or adding to their gold holdings across the month exactly matched the number reducing or selling all of their holdings. The Gold Investor Index set a decade peak of 65.9 as the first-wave Covid crisis began in March 2020. It hasn’t come below 50 since June 2019’s reading of 49.1.
Says Adrian:
“Yet again a crisis has sent gold prices soaring as other asset classes fall, confirming the precious metal’s value as a form of financial insurance. But rather than rushing to buy gold, private investors as a group have used these latest record highs to take profit and rebalance their position overall.”
Gold ended October with a new record-high monthly finish in US Dollars (up 6.8% at $1997 per Troy ounce), UK Pounds (up 7.4% at £1645) and Euros (up 6.5% at €1883) as well as in terms of many other major currencies including the Chinese Yuan and Japanese Yen.
Global stock markets in contrast lost 3.0% in Dollar terms, the third monthly fall in a row on the MSCI World Index, and major Western government bond prices also fell, with longer-dated US Treasury prices dropping 5.8% across the month.
As BullionVault users as a group sold 67.2% more gold than bought on average each day last month, net selling totalled 470 kilograms in October, the heaviest one-month liquidation since June 2019 (775kg).
That cut the total quantity of gold now securely stored and insured in specialist, independent vaults in each client’s choice of London, New York, Singapore, Toronto or (most popular) Zurich by 1.0% to the smallest since May 2022 at 47.4 tonnes, 1.5% below end-August’s record high.
Yet the value of those bullion holdings rose to new highs, up 6.4% in UK Pounds to £2.5 billion, and gold’s 12-month average price has now risen above £1540 per Troy ounce for the first time ever, putting it on track for another full-year annual average record.
Says Adrian: “Exchange-traded products tracking the gold price have now shrunk for five months running, and coin stores across Europe and North America are glutted with second-hand product as their customers also sell at these all-time highs. New buyers remain few and far between thanks to cash-in-the-bank offering the highest interest rates for well over a decade.
“Chinese household gold demand is running strong, in contrast to India ahead of the key Diwali festival. But while central banks continue supporting the gold price with record purchases for their bullion reserves, the real driver of October’s rise through $2000 per Troy ounce was a frantic turnaround in gold derivatives trading.
“Hedge funds and other speculative players were caught short by Hamas’ dreadful attack of 7th October. As a group, they then rushed to close out and get long, boosting their net bullish position in futures and options contracts at a near-record pace, inviting physical bullion investors to take profit.”
In contrast to gold, the Silver Investor Index rose in October, gaining 0.9 points to reach a four-month high of 51.6 as the price of the more industrially-useful precious metal edged up 1.3% in UK Pounds to £18.35 per Troy ounce.
Net of investor selling, BullionVault users added 3.0 tonnes to their holdings as a group, only the fifth monthly inflow of the last year, taking the total quantity securely stored and insured in each client’s choice of London, Singapore, Toronto and – most popular – Zurich up to 1,243.7 tonnes, higher by 0.2% from September’s 15-month low.
More widely, October’s terror attacks in Israel and the ensuing invasion of Gaza saw the number of first-time investors in precious metals worldwide rise by 26.8% from September’s figure at BullionVault, led by a 44.6% jump in the monthly count of new Eurozone users with the UK and USA lagging the global rebound with a rise of just 9.6% and 14.3% respectively.
But that still left October’s count of new precious metals investors worldwide running 30.6% behind the prior 12-month average, down 16.7% across the Eurozone, 39.2% down in the UK, and 61.8% down in the USA.
“Rising interest rates and record-high gold prices are combining to deter new investors in precious metals,” says Adrian. “Contrary to what some headlines might claim, the awful news from the Middle East has not, as yet, overcome that drag on the investment bullion market.”
