Investing in gold soars amid global markets uncertainty

Sales of gold are booming as investors look to a traditionally safe haven amid myriad uncertainties in the world economy, and increasing geopolitical tension.

The Pure Gold Company today reported a 62% increase in financial professionals – including investment bankers, accountants and judges – investing in physical gold on Wednesday compared to the daily average for 2018.

Meanwhile, London’s leading gold store in St James’s has seen a 253% increase in sales of gold year on year in March 2018 as investors flocked to the safe haven asset, as geopolitical and security tensions run high.

Sales at Sharps Pixley’s gold showroom were over £9m ($12.7m) during March 2018, up from £2.5m a year earlier. The high levels of gold sales was a record for the store which opened in January 2016 and was roughly double its previous best month.

Investors’ primary catalyst was the fear that planned US air strikes into Syria could spark further conflict between the US and Russia with negative consequences for financial markets.

The US dollar-denominated gold price on Wednesday hit an 11-week high as equities and the dollar fell.

Hedging against the risk
Pure Gold chief executive Josh Saul said: “56% of financial professionals who invested in physical gold yesterday had suffered a fall in the value of their equities. They chose to buy yesterday to hedge against the risk of global stock declines and a falling US dollar if the tensions between Russia and the US escalated on the back of an airstrike against Syria.

“We have also seen a 36% increase in first time investors purchasing physical gold amid general uncertainty over President Trump’s policies, a potential trade war with China, volatile global equities and the tensions between North Korea, Russia and the USA.

“Meanwhile Brexit has prompted a 6% increase in celebrity personalities, advised by wealth managers, investing in physical gold. They are worried that the uncertainty surrounding the UK’s exit from the EU could affect their portfolio, including UK asset classes like property and equities, over the next 3 years.

“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.”

Christopher Copper-Ind
Christopher Copper-Ind is Editor of International Investment.

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