Gold shines amid geopolitical uncertainty
The Pure Gold Company, which offers a curated gold investment service, says it has seen a significant spike in financial professionals buying into the asset class amid short-term concerns around political events.
The service provider said it saw a 62% rise in physical gold investments on Wednesday 11 April, compared to the daily average thus far in 2018, as fears rose of a US airstrike on Syria, with implications for US/Russia relations. The dollar price of gold also hit an 11 week high.
The company also notes an increase in first time investors of physical gold. Other ongoing concerns include a potential trade war between the US and China, tensions involving North Korea, volatility in global equity markets, and Brexit.
The latter is notable for what The Pure Gold Company says is a rise in the use of celebrity personalities investing in physical gold. The implication is this will influence the decisions of retail investors. However, there are also ongoing concerns about what Brexit could do to the UK’s property market, and hence another reason for looking to the precious metal.
“Property market risk is a recurring concern for many UK buyers of physical gold. Our clients are not necessarily looking for growth in the gold price, rather they use the precious metal as a hedge against risk, knowing that if the gold price does increase it usually means losses elsewhere in their portfolio,” said chief exeuctive Josh Saul.
Regarding longer term supply/demand balance, the World Gold Council stated in a recent note on trends in 2017 that: “New mine starts in recent years have mostly served to fill the gap left by production losses elsewhere, which has led to a relative plateauing in global output.”
China, the world’s biggest gold producer, saw a 9% fall in output in 2017 on the previous year, which the WGC linked to stricter environmental regulations, particularly in regards to “cyanide in tailings”, which caused the closure of marginal operations in the industry there.