by: Paloma Kubiak
The demand for gold has hit a record high while the price has also surged, the Royal Mint confirms.
The Royal Mint said gold has broken records this year as it reached new highs against the US dollar. Earlier today, it climbed to $1,944 per ounce – higher than prices seen in September 2011.
Gold has also achieved the strongest half-year price gains since 2016, as low interest rates and a resurgence in coronavirus cases drive investor demand for the relative ‘safe haven’ asset.
Since mid-March, the Royal Mint said its precious metals division has seen sales revenue increase by over 500%, compared to the same period last year.
Andrew Dickey, precious metals divisional director at The Royal Mint, said: “Gold is regarded as a safe haven asset, which means that it has traditionally performed well during times of global stress and economic uncertainty. Since the beginning of lockdown, we have seen unprecedented demand for gold bullion coins and bars as well as our digital precious metals products.”
Dickey added that it’s seeing an increasing number of new customers buying gold, silver or platinum investment products for the first time.
“Since the beginning of lockdown, over 6,000 new customers opened a bullion account with The Royal Mint, demonstrating the increased appeal of gold as a safe-haven asset for all investors during this economically turbulent period. Demand from millennial investors has been particularly positive and has increased by over 250% compared to last year,” he said.
The Pure Gold Company also reported a surge in demand, with an 849% increase in the number of first-time investors purchasing gold over the last seven days.
CEO Josh Saul said: “Our customers are very worried that a second wave and lockdown is likely to affect the UK as it has done in the US and other regions across the world. The relentless rise in the gold price is being spurred by the realisation that as furlough measures are curtailed and businesses are forced to let people go we are likely to see a considerable increase in unemployment.
“This will contribute to a reduction in GDP and market confidence. Stimulus plans that have been quickly drafted in to bolster the economy, both domestic and global, have also hurled us into a black hole of debt. The deteriorating relationship between the US and China is adding to an already volatile geopolitical environment.”
Saul added that many of its clients are concerned about the falling value of property, declining equity markets and failing businesses.
“During times of uncertainty, gold has a track record of increasing in value as it provides a safe haven free from counter-party risk. Now more than ever, people are seeing the tangible benefits of transferring their wealth out of the financial markets into something that is physical and that can be sold should they need the cash,” he said.
Source: This is Money