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- Upcoming election has prompted many to turn to gold
- Britons are buying the precious metal as a safe haven
Britons are flocking to buy gold and other precious metals following the announcement of the general election, The Royal Mint says.
Prime Minister Rishi Sunak set the 4 July election date on 22 May, and the news has sparked a latter-day gold rush.
Gold is a popular haven for investors during times of political uncertainty, as the price of the precious metal is almost completely removed from political or economic goings-on in the wider world.
The theory is that if the election has any negative economic effect – such as higher taxes or a weakened economy – any money held in gold will sit there smugly unaffected.
Barred for life: Gold bars such as this one, costing more than £61,000, are being snapped up by investors hoping the metal will be a safe place to leave their money during the election
The same is true of platinum, and to a slightly lesser extent with silver.
The Royal Mint said that it had seen a 49 per cent increase in the number of customers buying precious metal bullion since the election was called.
The volume of gold bought through the Mint rose 117 per cent in the week after the election, with spending on bullion up 145 per cent.
The election also seems to have nudged many to invest in precious metals for the first time, as 10 per cent of recent Royal Mint customers have never bought gold, silver or platinum before.
Stuart O’Reilly, of the Royal Mint, said: ‘The uplift in precious metals investing we have seen over the past week seems to have been driven by “safe-haven” buying from investors who are attempting to mitigate the risks associated with the current uncertainty.
‘Elections lead to increased questions around the future of the economy, tax, and security which can cause spikes in investment activity and greater interest in precious metals.
‘Due to gold’s safe-haven status and lack of correlation with other assets, we tend to see surges in the buying of gold coins and bars when investors are uncertain about the future.
‘In addition to the general election, investors are keeping a close eye on whether interest rates will come down and when that might happen, as well as looking ahead to America’s elections in November.’
Almost half (42 per cent) of recent precious metal purchases through the Royal Mint were to members of Generation X, aged 44 to 59 years old.
The most popular products were 1oz gold and silver Britannia coins, large gold bars and sovereign coins.
Good as gold: One of the most popular items among investors is the 2024 1oz gold sovereign, which costs £1,926 at current gold prices, and is sold through the Royal Mint
Some investors may be choosing gold because of other reasons besides the looming election.
Jason Hollands, managing director at wealth manager Evelyn Partners, said: ‘A high gold price driven by central bank buying will undoubtedly be attracting the attention of many investors and this is likely compounded by geopolitical tensions and perhaps a concern that valuations in parts of the US stock market are excessive too.
‘If you are investor with an Isa or a Sipp, the simplest way to invest is via a gold exchange traded commodity like the Invesco Physical Gold ETC.
‘One reason the Royal Mint may be seeing a particularly strong surge could however be tax related.
‘That’s because gold coins produced by the Royal Mint are considered legal tender currency and are therefore not subject to capital gains tax. Prices are however at a premium to reflect the craftsmanship involved.
‘What might be happening here is that some people who have decided to invest in gold outside of tax-free Isas and pensions, are doing to via the Royal Mint in the event that capital gains tax rises under a Labour government.’
The price of gold is up roughly 21 per cent in the past year, with most of the gains in the past six months. Over five years, it’s up nearly 80 per cent.
