Gold rush by investors sees buyers outnumber sellers

Gold rush by investors sees buyers outnumber sellers

The gulf between the number of private investors in gold and sellers is the greatest in a decade, according to online marketplace BullionVault, with buyers flocking to the market.

Data collated by BullionVault reveals the number of investors selling gold fell 10.8 per cent in the month of July, the lowest month-on-month level of seller activity since 2008.

The drop in the number of sellers came as the value of the commodity has slipped in recent months. In July the value of gold in US Dollar terms fell to the lowest monthly average in a year, down 7.2 per cent from the 20-month high recorded in April.

However, demand is still strong, despite a potential weakening in supply. 

Overall buyer activity was up 23.5 per cent in July, outnumbering sellers by more than four to one, although Eurozone investors accounted for a greater proportion of buyers, with a ratio of more than six to one.

BullionVault director of research Adrian Ash said: "The last time so few people chose to sell gold was the eve of the worst global economic slump since the 1930s, spurred by the Western banking crash flipping into uncontrolled crisis with the failure of Lehman Brothers.

"If there is any wisdom in crowds, savers and equity investors should take note.

"Customers repeatedly tell us their prime motivation [for buying] comes from gold's historic role as investment insurance, gaining when other assets fall.

"While last month's action was clearly spurred by the drop in gold prices, it shows strong conviction among private investors already owning gold to keep and add to their bullion holdings."

Robin Kyle, investment manager at TCAM, said: “It’s been a tricky time for gold recently. Traditionally, it’s been seen as a safe haven asset, but a number of trade factors, an unsteady US dollar, for instance have impacted its value.

“I think it’s potentially a good time to buy gold, particularly if investors are nervous, and are content to stick with their investment for the longer term.”