Gold will soon regain its lustre

In dollar terms at least, gold has erased most of its gains for this year. But demand is high, and the price will climb again.

Gold has not provided much protection against the market crash, but that is yet to dent investors’ enthusiasm, writes Henry Sanderson in the Financial Times. The yellow metal has fallen for the past two weeks and has now erased most of its gains for this year. Yet online gold exchanges report brisk business. Bullionvault.com says that net demand has not been this high since “the depths of the financial crisis in March 2009”.

The Pure Gold Company reports a 980% increase in Britons “panic purchasing” gold bars and coins over the past week compared with the weekly average. 

“Usually clients have lots of questions about the market and how the investment works, but over the last ten days it’s been a question of how much can they buy and how quickly can they do it,” says CEO Josh Saul.

Experienced gold bugs will not be surprised by the metal’s recent pullback. The gold price also fell sharply during the early stages of the 2008 crisis, says Caroline Bain of Capital Economics. Investors tend to sell gold to cover losses or urgent cash needs elsewhere. After all, one of the attractions of gold is that it is a “relatively quick and seamless way to raise cash in times of need”.

It was only when the markets digested the implications of massive quantitative easing that gold went on a bull run from late 2008 that eventually peaked at $1,900 per ounce in summer 2011, notes Russ Mould of AJ Bell. If recent history is any guide, the launch of QE Infinity may be laying the groundwork for a repeat performance.

Recommended

What is the pension lifetime allowance?
Pensions

What is the pension lifetime allowance?

If you have been saving into your pension for some time now - or were paying attention during Jeremy Hunt’s inaugural Budget - you may have heard the …
20 Mar 2023
Rightmove: UK house prices up £3,000 as property market rebounds
House prices

Rightmove: UK house prices up £3,000 as property market rebounds

Rightmove’s latest house price index shows the property market has been resilient despite an economic downturn
20 Mar 2023
How to get a council tax reduction
Tax

How to get a council tax reduction

Council taxes will go up next month, but some people can get a discount. We explain who can get a council tax reduction
17 Mar 2023
How much tax will you pay from April 2023?
Tax

How much tax will you pay from April 2023?

The Chancellor announced a series of tax changes and allowance freezes in his Autumn and Spring budget. We break down what these mean for you ahead of…
17 Mar 2023

Most Popular

Government plans could see NS&I boost interest rates
Savings

Government plans could see NS&I boost interest rates

The government-backed bank has a new funding target, which could prompt it to boost the rates on its Premium Bonds, ISAs and bonds.
16 Mar 2023
Share tips of the week – 17 March
Investments

Share tips of the week – 17 March

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages
10 Mar 2023
How to make your child a tax-free millionaire by age 37
Investments

How to make your child a tax-free millionaire by age 37

Exclusive research for MoneyWeek reveals how funding an ISA and a pension for your child until age 18 could build up a seven-figure sum by the time th…
14 Mar 2023