Market Research

Gold Saw Big Sell-Off In August As North Korea Tensions Brewed - Data

Josh O'Neill, Assistant Editor, 6 September 2017


Last month, investors cashed out on gold investments made in July, when the precious metal hit its lowest price against the US dollar in nearly six years.

Investors who seized gold’s price drop in July quickly cashed out in the following month, against a backdrop of rising political tensions between North Korea and the rest of the world, according to new data from BullionVault

Users of the online gold exchange ditched nearly a third of a tonne (328kg) of gold in August, as prices leapt amid stirring global tensions surrounding North Korea’s missile tests. The move nearly reversed July’s net inflows, when BullionVault users grew their aggregate gold holdings to a record-high 38.1 tonnes.

“Contrary to some headlines, [US President Donald] Trump’s North Korean missile crisis has yet to spur any surge in private investor demand for physical gold,” said Adrian Ash, director of research at BullionVault. “Quite the reverse, in fact. Private individuals… have been net sellers as a group, taking advantage of these speculative-led price gains to book profits.”

As gold’s price tumbled, July saw the lowest number of sellers on BullionVault since December 2015 as the precious metal hit its lowest price against the US dollar in nearly six years. But when US dollar prices swelled to 11-month highs in August, the number of net gold buyers slid 13.2 per cent, while the number of sellers jumped 92.6 per cent. 

This pushed the BullionVault’s Gold Investor Index – a measure of private investor sentiment towards bullion – down to 51.6 in August from 55.1 in July. A reading of 50 occurs when the number of net buyers and sellers across the month is equal.

“Gold rarely offers safety from geopolitics, never mind war,” Ash said, “But its appeal as insurance against losses on other investments continues to grow as the threat of financial fall-out worsens from today’s global debt bubble.”

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