UK gold sales surge

Sales of physical gold rose sharply in 2020 according to data from the UK’s Royal Mint. The 1100-year-old government-owned business, which makes more than 3.0 billion coins per year for the UK and overseas governments.

The coin maker saw demand for gold coins and bars rise substantially over the course of last year, and what’s even more interesting is that much of that demand came from a very specific demographic.

The Royal Mint Data shows that demand from customers aged between 22 and 37 years old jumped by 37%. whilst sales of 1 and 5-gram gold bars increased by 53% year over year, in both November and December 2020.

The data suggest that millennial investors are concerned about the possible return of inflation and an erosion of the purchasing power of paper or fiat currencies that is often associated with it. A trend that might be of interest to the marketing departments with London’s FX and margin trading businesses.

Overall sales of gold made by the Royal Mint over the final two months of the year rose by a whopping 510% when compared to the same period in 2019.

Though people were buying physical gold, not everyone wanted to take delivery and the Royal mint saw an increasing take-up of digital gold purchases by buyers who utilised the mints Digigold storage and custody facility.

The mint introduced the mini gold bars as gifts that be could be given at Diwali and Christmas and their introduction seems to have caught the public imagination.

The Royal Mint’s divisional director of precious metals Andrew Dickey said that: “Gold continued to shine in the last quarter of 2020 as people looked to precious metals for safe-haven investments, but also for savvy Christmas gifts”

Mr Dickey expects the demand for gold to persist and he added that “As we go into 2021, various fiscal and monetary policies – both of which are traditional drivers of gold demand – will begin to unfold in an attempt to support the recovery of the global economy. With this in mind, we’re expecting demand for our precious metal products to continue to shine”

In its 2021 outlook report, the World Gold Council predicted that concerns about ballooning budget deficits, low-interest rates and a possible return of inflation could drive demand for the precious metal. Gold finished 2020 up by 24.6% in US dollar terms, 14.30% higher in euro terms and 20.80% to the good when expressed in sterling.

The report also highlighted that gold prices seem to be correlated with and are tracking the growth in the global money supply. Which has been expanding as governments and their central banks pursue a twin-pronged approach of fiscal and monetary stimulus, to reboot economies, that were hard hit by the global pandemic.

The World Gold Council believes that central banks will have been net purchasers of gold themselves, over 2020 and that this trend will continue in 2021.

Gold has historically been seen as the go-to safe-haven investment, though of course it now faces competition from cryptocurrencies which are also seen as being inflation proof. Or at least not subject to an erosion in value bought about by central bank printing.

However, the Royal Mint data suggests that among UK investors and younger one’s in particular gold still has a distinctive allure.