BullionVault, the claimed world’s largest online marketplace for physical precious metals, has said that volumes of gold traded are down 31.5% in October on the average over the previous 12 months, amid data from Google Trends showing that the number of internet searches for ‘buy Bitcoin’ have overtaken ‘buy gold’ – having overtaken ‘buy silver’ at the start of 2017.
The Gold Investor Index, published by BullionVault, moved to 54.6 in October, from 54.5 in September. This measure of sentiment would read 50 if the number of buyers and sellers were equal. It peaked at 71.7 in September 2011 when gold prices were hitting record highs.
The continued pace of the US stock market is a key reason why gold prices have gone down, added Adrian Ash, director of Research at BullionVault.
“Brexit isn’t worrying the FTSE, and Catalonia’s independence crisis has so far failed to dent Europe’s bull market,” he added.
“Some investors are also being distracted by the noise around Bitcoin and other cryptocurrencies. Altogether that’s made interest from new gold investors the weakest since the metal’s half-decade price lows of end-2015, just the UK referendum and Trump’s election shock helped gold enjoy its strongest annual rise in six years.”
Currency also has a bearing on returns from gold. The euro price fell 1.4% in October, while in sterling terms it fell 1.8% and against the dollar 2.7%. Internet traffic to BullionVault from Spain fell 16% from its earlier 12-month average, with the number of first time Spanish investors/users 39% below the previous 12-month average.
Ash said that the data points to fewer investors buying gold in larger quantities, which matches other market data suggesting that institutions have been increasing their gold investing. Overall, BullionVault clients increased their holdings by 208kg in October, which was the first net addition in three months, taking the total amount of gold vaulted in London, New York, Singapore, Toronto and Zurich to 37.9 tonnes, which is just below a record of 38.1 tonnes experienced by the firm in July 2017.
However, the picture is still unclear, as Ash also referenced poor sales of bullion coins and small bars among UK and US retailers – US gold and silver coins are heading for “the weakest sales in a decade”, while pre-tax profits are down 40% at Australia’s Perth Mint. That said, Germany listed trust fund products backed by gold have “expanded by 37.4% so far this year” according to World Gold Council data, with indications it is institutional rather than private investors driving this change. BullionVault also notes that trading volumes in US derivatives contracts referencing the gold price are up 25.7% year to date, against the first 10 months of 2016, according to Chicago Mercantile Exchange data.