Physical Gold Monthly Report | February
- Global demand for gold ETCs returned to a net
positive position after 2 months of net selling
- An LBMA survey of industry experts revealed the
analysts predicted gold to average $1,973.80 in 2021, up 11.5% on 2020’s
average gold price (based on LBMA PM prices)
- Gold held in London vaults hit a new all-time
high of over 9,537 tonnes ($578.8bn) in December 2020
Past performance is no guarantee
of future performance.
Source: LBMA, HANetf
Month figures based on 31.01.20 -31.01.21.
When you trade gold ETCs your capital is at risk.
Breakdown of January
Gold opened the year up almost 3% on the final LBMA PM fix
of the year in USD, GBP and EUR as run-off elections in Georgia were set to
shape the direction of US politics, handing control of both houses of Congress
to the Democrats.
Following the Capitol riots on 6th January,
Donald Trump finally conceded the election, lowering some of the safe-haven
demand for gold, resulting in the gold price dropping below $1,850/oz.
Gold continued to slide in mid-January as the dollar strengthened
on the back of reassurances from the US Federal Reserve that it was too early
to talk about tapering its bond buying programme.
Gold rebounded back above $1,850/oz on 20th
January as the issue of trade tensions between the US and China resurfaced.
Trade tensions were a major driver of the gold price before the coronavirus
crisis, with increased tensions often resulting in higher gold prices, but the
issue had largely been overshadowed in 2020.
At the end of January, gold was trading at $1863.80/oz
buoyed the prospect of increased government spending and debt as President
Biden redoubled his efforts to get a $1.9trn stimulus package through Congress.
The Royal Mint
Physical Gold ETC Performance Table
As of 31.01.21
The Royal Mint Physical Gold ETC Securities
London 3pm LBMA Gold
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 31/01/21.
The London Bullion Market Association (LBMA) have published
their annual precious metals forecast survey that asked 32 gold market analysts
to predict the average price of gold over the next year. The overall average
forecast for gold in 2021 was $1,973.80, with 44% predicting a price of $2,000
According to those surveyed, the top 3 drivers for the gold price were expected
to be negative or falling interest rates, a weaker USD and US monetary and
Data compiled by the World Gold Council revealed that
October-December gold demand was the lowest of any quarter since 2008.
Coronavirus lockdowns and economic uncertainty are thought to have hit
jewellery demand which usually accounts for around half of all gold demand,
particularly in large Asian markets. Central bank demand was positive but
weaker than usual after experiencing net selling in the previous quarter.
Gold held in London vaults hit a new all-time high of over
9,537 tonnes ($578.8bn) in December 2020 despite some outflows from gold ETFs
in November and December.
London vaults, operated by seven private firms (including JP Morgan and HSBC)
as well as the Bank of England, store gold on behalf of institutions, central
banks, ETFs and private investors and hold gold in both ‘allocated’ and
‘unallocated’ arrangements. Gold that backs The Royal Mint Physical Gold ETC is
stored outside of this system, in The Royal Mint’s highly-secure vault in South
Precious metals market analysts responding to the LBMA’s
annual price forecast survey deemed inflation and interest rates to be the most
significant driver of the gold price over the course of 2021. While the
experience of 2020 shows that we never know what the future might hold, gold
has historically performed well during periods of inflation.
Coupled with large increases in government spending, it is easy to see why
analyst might be feeling bullish about gold. The analysts’ $1,973.80 average
price prediction would represent an 11.5% increase on 2020’s average price –
one analyst even predicted that the gold price could hit $2,680 before 2022.
However, if vaccine roll out of programmes succeed more
quickly than expected, this may boost consumer optimism and help buoy equities
while reducing some demand for gold, particularly for investors seeking
safe-havens. It will be interesting to see how consumers in the large gold
jewellery markets of India and China react to a greater degree of confidence in
the economy. Gold demand in some of Asia’s largest markets has been hit by
lockdowns restricting access to jewellery stores, while the high gold price and
unemployment fears have further dampened demand – might a greater degree of
economic optimism see retail investors in Asia flood back into the gold market,
helping support demand (and prices) in 2021?
The Royal Mint Physical Gold ETC (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 that are held on a
segregated basis and sourced on a best endeavour basis from the LBMA’s
Responsible Sourcing programme – a transparent audit process to assure
investors that the gold is from conflict-free, legal sources.
Gold is held at The Royal
Mint’s highly secure vault in the outskirts of Cardiff, Wales – a feature
unique among gold ETCs. Operating outside of the London banking and clearance
systems, RMAU provides an attractive option for investors seeking real
diversification in their gold custody arrangements. RMAU investors are also
able to redeem their ETCs for physical gold bars or bullion coins produced by
The Royal Mint.
Visit the RMAU Fund Page for more information.