Retail investment in gold bullion has stabilised as the precious metal's price continues to rise since its longest downturn in two decades – though exchange-traded product (ETP) investment continues to reduce.
BullionVault, an exchange that produces the Gold Investor Index based on its customers’ buying and selling of physical bullion, says the heavy selling of gold since the beginning of the price decline in April has “stopped and begun to turnaround”.
"The Gold Investor Index continues to show a positive balance of buyers over sellers for investment gold bullion. It appears to be that the retail investor has started to buy more frequently on recent dips,” says BullionVault’s Miguel Perez-Santalla.
Nevertheless, the index drifted lower in July to 52.06. A reading above 50 shows there are more buyers than sellers.
At its peak in September 2011 the index was at 70.7. A 16-month high was achieved in April this year when the index reached 58.6. This was at the same time as the gold price started to drop 17.25% in the period from the end of April to the end of June.
According to the World Gold Council, the decline in gold investment demand in the first quarter this year relative to the first quarter last year was solely attributable to the net outflows from exchange-traded funds, which obscured the strong rise in investment for gold bars and coins at the retail level.
Fund manager BlackRock says in an ETP report that gold outflows continued in July, building on an exodus that started in January. Year-to-date outflows until the end of July were $30.9 billion (€22.7 billion).
July saw a nearly 11% price increase in gold, according to BullionVault.
The gold rise taken from the London Bullion Market PM shows a rise to $1,280.50 per ounce on August 6 from $1,212.75 on July 5.
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