The Pure Gold Company has reported a 605% surge in demand for physical gold bars and coins, compared to the weekly average for 2024, driven by uncertainty ahead of the US election and its potential geopolitical implications. Given that gold is generally dollar-denominated, U.S. election outcomes typically ripple across global markets, influencing both the price of gold and investor behaviour worldwide, including in the UK.
The Volatility Index (VIX), often called the Wall Street fear gauge, has risen by 65% over the past six months, and this uncertainty has underpinned demand for physical gold which has increased by 16% over the same period.
Josh Saul, CEO of the gold investment firm said: “Many of our clients are drawing parallels to the Brexit referendum in 2016, when, in a matter of hours, gold prices surged by over 20%. This week’s behaviour reflects that same anxiety, with investors taking steps to protect their portfolios in response to heightened volatility. Gold is often used as a hedge against uncertainty, and the election is a key example of this.
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“Feedback from our clients reveals increasing concern that a Harris victory could spark political unrest similar to the capital riots in the aftermath of the last U.S. election. On the other hand, some fear a Trump win could deepen geopolitical tensions. These developments underscore investors’ belief in physical gold as a safe haven in the face of both domestic and international volatility.
“Over the past year, we’ve seen a significant shift towards gold. There has been a 71% increase in people converting their pension and SIPP exposure from equities to physical gold, and many cite not only US-related uncertainties but increasing corporate instability globally.
“More recently, the UK budget announcement which removed inheritance tax benefits on pensions, has led to a 92% increase in pension-related enquiries over the past seven days. Many clients are considering taking a tax-free lump sum from their pensions to invest in physical gold, which, aside from potential capital gains tax advantages, can also be passed on to beneficiaries under the seven-year inheritance tax rule, potentially allowing for 100% tax relief.
“Similarly, the capital gains tax increases in the budget led to an 87% rise in existing clients reallocating wealth from assets that are now more exposed to capital gains. Instead, they are choosing physical gold coins, which under certain circumstances are free from tax liabilities. This move reflects increasing interest in assets that can offer both growth potential and tax efficiency, especially in a high-tax environment.
“Investors aren’t purchasing gold with growth in mind; they seek safety (and a hedge) in an unpredictable economic landscape. Gold’s value often rises as other asset classes decline, which, as our clients are quick to recognise, makes it a resilient choice amid ongoing global instability.”
