Physical Gold Monthly Report | January

When investing in a Gold ETC your capital is at risk.

• Gold finished the year up 23.6% in USD, 19.4% in GBP and 12.3% in EUR[1]  
• Gold held in London vaults increased for the seventh consecutive month to a new record of 9,452 tonnes in November[2]  
• Investors look to monetary and fiscal policy as potential major factors for the gold price in 2021

Performance Review

Monthly Performance of Fund/Sector

• The London Bullion Market Association (LBMA) PM gold price ranged between $1,810.75 per troy ounce on 1st December and $1,887.60 on 30th December
• The Royal Mint Physical Gold ETC Securities, our Gold ETC, closed the year with an AuM of just under $389million

Gold Performance

Current performance is no guarantee of future performance.

Source: LBMA / HANetf December figures based on 01.12.20 – 30.12.20

What Has Driven This Performance?

With the news of the coronavirus vaccine, the outcome of the US election and a resolution to the UK-EU trade negotiations all behind us, gold still managed to climb throughout December despite the reduced sense of uncertainty.

The global pandemic saw a surge in demand for US Treasuries, but as a sense of optimism returns to the equity markets, investors have increasingly been looking for stocks and shares to make up a larger part of their portfolios. The US Dollar has also been hit by the comparative pace of the apparent recovery of the Asian economies versus the US. Additionally, recent statements from the US Federal Reserve have also implied that yields on US Treasuries will remain low until certain criteria are met. The combination of these three factors has hit demand for USD, causing it to weaken, which has resulted in a higher gold price.

Mid-month gains were precipitated by bipartisan consensus in the US that an agreement on the long-anticipated coronavirus fiscal stimulus package was imminent. The prospect of additional government spending undermined the USD and boosted gold.

However, it was not just in USD that the price rose. The GBP gold price also followed a broadly upward trajectory through December, rising 2.3% over the month. Brexit negotiations impacted the value of the pound at various points throughout December as speculation mounted about the shape (and possibility) of a trade deal between the UK and the EU, leading to a slightly more volatile GBP gold price.

London Bullion Market Association (LBMA) PM Gold Price (01.12.20 – 31.12.20)

Total Return NAV to Date (31/12/2020)

London Bullion Market Association (LBMA) PM Gold Price (01.12.20 – 31.12.20)

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 04/01/21. Note that there was in addition to there being no LBMA PM gold fix on UK bank holidays, there was also no LBMA PM gold fix on 24/12/20 and 31/12/20

Industry News

The Original Christmas Gift – Still Popular 2,020 Years Later

Over the Christmas period (1st November – 31st December 2020) The Royal Mint saw a surge interest in gold products from its website. The number of customers buying gold bullion was up 463% compared to the same period in 2019 [3]. Small 1g and 5g Christmas gold bars were a hit with gifters with The Royal Mint selling 53% more than the previous year, but standard gold bars, and Sovereign and Britannia coins also proved popular.

However, while the appeal of gold has endured, gold-gifting has changed with The Royal Mint also offering a more 21st century approach. Private investors not intending to take immediate physical delivery of gold can gain exposure to the gold price though their ISAs, SIPPs and GIAs via the Gold ETC or can opt to buy ‘pool-allocated’ gold via The Royal Mint’s DigiGold and Little Treasures propositions. Investors in The Royal Mint’s Physical Gold ETC are also able to redeem their certificates for physical gold coins or bars at any point.  

Outlook

Despite some major geopolitical issues being settled or becoming clearer in the final months of 2020 – the US elections, the Brexit trade deal, the coronavirus vaccine – the gold price ended the year 23.6% higher than the first LBMA PM fix of 2020 (2nd January, $1,527.10). In GBP terms gold finished the year 19.4% higher, and priced in EUR the figure was 12.3%.

Though many are anticipating a Biden-administration to ease geopolitical tensions between the US and China, issues persist between oil-producing nations, and within and between some Middle Eastern states. These could aid gold ascent higher should they escalate. However monetary and fiscal responses to the coronavirus pandemic could be the main drivers of the gold price in 2021. As governments grapple with rising unemployment and company liquidations, and seek to introduce reflationary measures, gold’s traditional function as a hedge asset and store of value might appeal to investors.

A rebound in jewellery demand in Asia (and particularly in the largest markets of China and India) after uncertainty and lockdown restrictions hampered buying, as well as increased central bank purchases in 2021 – both slowed in 2020 due to rising price of gold – could help support demand, and thus prices, further.

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 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.

• RMAU Factsheet
• RMAU Video
• RMAU Whitepaper
• RMAU Fund Page
• RMAU Points of Difference
• RMAU Physical Redemption FAQs
• RMAU UCITS Eligibility FAQs
• The Investment Case for Gold
• Investor’s Guide to the Gold Market and Gold ETCs
• Now You Can Hold Responsibly Sourced Gold Bars Through an ETC
• The Importance of the Physical Gold Custodian