Demand for gold is soaring as investors seek a safe haven from market chaos 

No one quite knows where the gold price is heading – up or down – but the precious metal’s reputation as a safe haven in troubled times is resulting in record investor demand.

BullionVault, a precious metal dealer, says demand this month from investors for gold is the heaviest since the depths of the global financial crisis in early 2009.

The number of investors opening new accounts, it says, is nearly three times that of last year’s average – and above that of serious gold-buying sprees in the past such as during the 2016 Brexit vote and September 2011 when the euro crisis raged and London was embroiled in riots.

Adrian Ash, director of research at BullionVault, says: ‘With acute economic disruption crushing share prices, gold is gaining appeal as a rare, physically indestructible asset that people worldwide use to store value during times of crisis.’

Over the past year, the price of gold in pounds has increased by nearly 30 per cent to some £1,281 an ounce. This is despite the fact that since the coronavirus crisis, its price has fallen back a little from its February high of £1,304 an ounce.

Most investment experts believe the asset class remains appealing. Vincent Ropers is joint manager of investment fund Wise Multi-Asset Growth that invests in a mix of equities, fixed interest bonds, alternative investments and cash.

He says: ‘In volatile times, gold remains one of the few areas where investors can find cover. With the level of fiscal stimulus we are starting to see around the world – a measure that ultimately will be inflationary – gold also offers a good hedge.’ 

Ropers believes the current volatility in the price should not deter investors. ‘Price volatility is not unusual in the early stages of an economic downturn,’ he says. 

‘In the financial crisis of 2008, for example, the gold price did not respond straightaway until starting a three-year rebound that saw the price shoot up by more than 150 per cent.’

Sebastien Galy, an economic strategist at Nordea Asset Management, agrees. He believes gold ‘should do well’ in ‘an environment where central banks worldwide are printing money on a large scale’ and inflation rates will rise.

‘It is the type of narrative on which gold feeds,’ he adds.

Gold can be purchased through merchants such as Baird & Co, BullionVault, Sharps Pixley, The Gold Bullion Company, The Pure Gold Company, The Royal Mint and Spink.

For example, the purchase of £10,000 of gold online through BullionVault will cost 0.5 per cent initially, plus 0.36 per annum to store. If sold after a year, the sales fee would be 0.5 per cent. Total fees of around £136.

A one-ounce minted gold bar (bullion) from The Royal Mint currently costs around £1,380. It will be delivered free of charge although The Royal Mint offers buyers the choice of having the gold stored securely at its vaults.

On gold worth £10,000, the annual vault charge would work out at about £120, although it could be higher if gold prices are rising. Last week, a note on The Royal Mint’s website warned of delayed delivery times.

Rather than buy physical gold, investors can purchase a stock market-listed exchange traded commodity whose performance tracks the gold price.

One such vehicle is iShares Physical Gold that is included on the list of wealth manager Inter-active Investor’s top 60 investment funds.