newsinsights

Browse our recent blogs, articles and papers below and sign up here for our regular newsletter. 

Physical Gold Monthly Report | December

 

  • The announcement of a coronavirus vaccine led to a more bullish market sentiment – reducing some ‘safe-haven’ demand 
  • Gold held in London vaults increased for the sixth consecutive month to a new record of $566bn[1]  
  • A Republican Senate majority will likely be an important consideration for investors under the new US administration

 

Performance Review

Monthly Performance

  • The London Bullion Market Association (LBMA) PM gold price ranged between $1,940.80 per troy ounce on 6th November and $1,762.55 on 30th November[2]
  • Despite gold ETCs experiencing net outflows in the last week of November, World Gold Council data shows The Royal Mint Physical Gold ETC Securities, saw the highest net inflows of any LSE-listed physical gold ETC or gold ETF[3]

 

Gold Performance

 

November

 

12 Month*

-6.34%

11.46%

Current performance is no guarantee of future performance.

Source: LBMA / HANetf November figures based on 02.11.20 – 30.11.20

 

What Has Driven This Performance?

The protracted counting process in the US elections, and the fact the result seemed less certain than the opinion polls indicated, likely drove some safe-haven buying, and the gold price began the month rising steadily.

As markets opened on Monday 9th November following projections that Joe Biden had secured enough electoral college votes to become the next president, the intraday gold spot price briefly rose to over $1,960[4] as investors likely considered both the economic implications of a Biden presidency, and the likelihood of legal challenges by the Trump campaign.

However, on the same day, the announcement of a successful coronavirus vaccine by Pfizer/BioNTech buoyed investor sentiment and equities rallied. Unsurprisingly, gold suffered as a result of a more positive economic outlook as immediate safe-haven demand reduced, the intraday spot price fell by over $100 in a matter of hours.[5]

The likelihood of the Republicans maintaining their Senate majority (there is still the outside possibility of a split Senate with the Vice President having the deciding vote), placed further pressure on gold as investors perceived it might force Democrats to compromise and settle for a lower than anticipated fiscal stimulus package. The prospect of the large(r) fiscal stimulus package proposed by the Democrats has been gold-positive in recent weeks.

 

London Bullion Market Association (LBMA) PM Gold Price (01.11.20 – 30.11.20)

Total Return NAV to Date (30/11/2020)

 

1M

3M

6M

YTD

12M

Since Inception

The Royal Mint Physical Gold ETC Securities

-6.36%

-10.00%

1.85%

11.26%

-

11.26%

London 3pm LBMA Gold

-6.34%

-9.95%

1.96%

16.36%

20.71%

11.46%

Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: LBMA / HANetf, data as of 30/11/20

 

Industry News

Central Banks Return to Net Buyers Status

A working paper published by the Bank for International Settlements this month, What Share for Gold? On the Interaction of Gold and Foreign Exchange Reserve Returns concluded that while gold can be volatile compared to other reserve assets, ‘a major war, a period of very high inflation, or – speaking to more recent events – a systemic cyberattack or a global pandemic may give central banks enough reason to hold on – if not add – to their bars of gold. Indeed, in highly adverse scenarios, a country’s stock of the precious metal could be one of the ultimate means to ensure confidence in the stability of its finances’.[6] Shortly after the publication came the news that despite net sales of gold in August and September, central banks returned to the status of net buyers of gold in October, adding a net total of 23 tonnes of gold to their reserves.[7] 

Bitcoin and Gold

A widely publicised report published by JP Morgan led many media outlets to ask the familiar question ‘Is Bitcoin the new gold?’. While the report was broadly bullish on Bitcoin’s potential, it noted that ‘the market cap of bitcoin would have to rise 10 times from here to match the total private sector investment in gold via a gold ETF or ETC or bars and coins’[8], not to mention gold’s other demand sectors like central banks, jewellery and technology. Gold’s liquidity, multi-millennium history and track record of being a safe haven for investors is difficult to ignore, and while Bitcoin may have a useful role in investment portfolios, it does not necessarily perform the same function or react the same way in different scenarios. Past performance is not indicative of future performance, and investors should consider their own reasons for choosing particular investments.

 

Outlook

While the positive news of the coronavirus vaccine spurred stock market confidence and hit the gold price, investors are awaiting information on how vaccine roll-outs are to be managed. Discussions of government debt (and corporate debt) are re-emerging and the news of large firms entering administration has led some to take a more cautious approach. This could be gold-positive.

 

 

Product Details

The Royal Mint Physical Gold ETC Securities (RMAU) is designed to offer investors an effective way to access the gold market as it tracks the spot price of physical gold.  

It is the first financial product to be sponsored by The Royal Mint and the first gold ETF or ETC custodied with a European Sovereign Mint.  

The ETC is backed by London Bullion Market Association (LBMA) Good Delivery bars held on a segregated basis.  The gold will be stored and guarded in The Royal Mint's highly secure vault in Llantrisant, Cardiff.  

The value of your investment may go down as well as up and past performance is no indication of future performance. Your capital is at risk.

Exchange Bloomberg CODE RIC ISIN  SEDOL  Currency TER
London Stock Exchange RMAU LN  RMAU.L  XS2115336336  BKT7175  USD  0.22%
London Stock Exchange RMAP LN  RMAP.L  XS2115336336 BKT7197 GBP  0.22%
Deutsche Boerse Xetra RM8U GY  RM8U DE  XS2115336336 BKT71G4 EUR  0.22%
Borsa Italiana RMAU IM RMAU.MI XS2115336336 BKT71B9 EUR 0.22%

 

Click here to download the Physical Gold Monthly Report 

 

 

Tell us how we can help