- 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% |
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