Gold Investors Remain on the Sidelines Despite Bullish Outlook

According to new research from BullionVault, private investment in gold bullion continues to climb, while silver has seen a profit-taking dip. First-time gold investors, however, are scarcer than they have been in the past decade, even though there is a bullish outlook for gold.

Key Points:

  • Private investment in gold bullion remains positive this summer, but investors are taking profit on silver
  • First-time buyers of precious metals remain at the lowest in a decade
  • The Gold Investor Index has dropped 2.1 points to read 54.1, indicating more buyers than sellers
  • The Silver Investor Index fell 4.3 points to 48.3, with sellers outnumbering buyers
  • Rising interest rates are dulling the appeal of precious metals for investors
  • The rise in bullion prices highlights the strength of jewellery and central-bank demand for gold and industrial demand for silver
  • The number of first-time bullion buyers fell for the 4th month in a row, down 18.9% worldwide from June’s count

The Gold Investor Index: An Overview

The Gold Investor Index provides a snapshot of investment trends by comparing the number of people buying gold with the number selling. The index peaked at 65.9 during the onset of the Covid crisis in March 2020, indicating a greater number of buyers who recognise the advantages of owing gold bullion. However, July saw the index decline by 2.1 points to 54.1, following an 8-month high in June.

IndexJune 2023July 2023
Gold Investor Index56.254.1

Silver Investor Index: A Contrasting Picture

In contrast to the Gold Investor Index, the Silver Investor Index witnessed a drop of 4.3 points, falling to 48.3. This represents the lowest reading since April 2023. Here, sellers outnumbered buyers, a trend observed four times in the past nine months.

IndexJune 2023July 2023
Silver Investor Index52.648.3

Insights from BullionVault’s Director of Research

Adrian Ash, BullionVault’s Director of Research, provides insightful commentary on the data. He draws a parallel with a previous period when gold and silver were attracting few new buyers – during the aftermath of the global financial crisis. Despite the rising interest rates and the surge in global stock markets currently dulling the appeal of precious metals, gold and silver are displaying solid resilience.

The Impact on Bullion Prices

Intriguingly, the lack of investment inflows to gold and silver has drawn attention to the rise in bullion prices. This signals a strong demand for gold for jewellery and central-bank purposes, as well as for silver in industrial applications, particularly in solar-power installations.

Looking Ahead: Potential for Price Increases

Ash suggests that when investment demand returns and first time bullion buyers consider investing in gold , prices could quickly rise. This scenario is supported by the banking sector’s recent mini-crisis.

A stack of silver bars

Gold and Silver Holdings among BullionVault Users

MetalJune 2023July 2023
Gold (tonnes)48.248.2
Silver (tonnes)12511244

Despite the decrease in the Gold Investor Index, gold investment demand by weight eased back in July, leaving BullionVault users’ total holdings virtually unchanged at a new record above 48.2 tonnes. On the other hand, silver selling outweighed demand, reducing the total quantity to 1,244 tonnes, smaller by 1.8% from last October’s record high.

A Dip in First-time Gold Investors

July’s rebound in gold and silver prices did not attract new interest beyond existing precious-metals investors. The number of first-time bullion buyers has decreased for the fourth consecutive month, down 18.9% worldwide from June’s count, which was already the fewest since April 2014.

Despite some headwinds, gold and silver continue to demonstrate resilience. With well-informed strategies, investors can navigate these waters successfully and potentially reap considerable benefits when the tide turns in their favour.

This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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