Read through our latest monthly report written by The Royal Mint, our partners for our Physical Gold ETC.
- Central
Banks continued to add gold to their reserves throughout June
- The World Gold Council’s ‘Gold Demand Trends’
report for June explained how German consumers had bought more gold bars and
coins in 2020 than in any previous year Performance Review
Gold Price Performance
|
June
|
12 Month*
|
|
-7.20%
|
-0.28%
|
Past performance is no guarantee
of future performance.
Source: LBMA, HANetf
*12
Month figures based on 30.06.20 -30.06.21.
Economic Impact
In the first week of June, US employment and service sector
data was released which proved to be more favourable than some had previously
predicted. This data boosted expectations of a promising economic recovery in
many sectors. As a result, the gold price fell by more than 2%, while silver
and platinum fell by 4.3% and 3.7% respectively.
Despite the positive news around US employment rates,
inflation continues to be a concern globally.
After reaching a two-year high of 2.1% by the end of May 2021, The Bank
of England’s former Chief Economist, Andy Haldane, predicted that UK inflation
rates will surpass 4% by the end of the year, which will result in higher
prices in restaurants, for household and DIY goods and fuel. Rising rates of
inflation have traditionally been a driver for increased gold demand due to the
precious metal’s role as a store of value - the price of gold has traditionally
outpaced consumer price inflation.
Many individual investors are using the current price dip as
an opportunity to buy gold, especially as there are indications of continued
positive performance in the months ahead. In June, the World Gold Council
revealed that demand for bullion coins and bars is still greater now than it
was last year, and the average price of gold is forecast to hit $1,974 per
ounce in 2021; 11.5% higher than the average price in 2020.[1]
Past performance is no guarantee of future performance.
The Royal Mint Physical Gold ETC Performance
Table (As of 30.06.21)
|
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
|
The Royal Mint Physical Gold ETC Securities
|
-7.22%
|
4.21%
|
-6.69%
|
-6.69%
|
-0.50%
|
11.16%
|
|
London 3pm LBMA Gold
|
-7.20%
|
4.26%
|
-6.59%
|
-6.59%
|
-0.28%
|
11.49%
|
The performance calculation is based on USD. If the
currency in which the past performance is shown differs from the currency of
the country in which you reside, you should be aware that due to exchange rate
fluctuations, the performance shown may increase or decrease if converted into
your local currency. 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: Bloomberg / HANetf. Data as of 30/06/2021
Central Bank Purchases
Central Banks continued to add
gold to their reserves throughout June - as has been the trend for 2021 so
far. In fact, the sector added between 150-200 tonnes of gold to
reserves in total.[2] A significant portion of this increase came from banks
in central and eastern Europe. Hungary reported that they had tripled
their gold reserves to a total of 95 tonnes
and Poland confirmed that they had added over 200 tonnes to
their national reserves over the course of the last two years.[3]
International Update
The World Gold Council’s ‘Gold Demand Trends’ report for
June explained how German consumers had bought more gold bars and coins in 2020
than in any previous year, even when compared to the period following the
global financial crisis of 2007-2008. It also cited a survey whereby 40% of
German gold-buyers revealed they intended to purchase more gold in 2021, citing
the coronavirus pandemic as their main driver.[4]
In India, it was reported that as a result of ongoing virus
case rates, demand for gold was still falling short of expectations in June.
‘Brick and mortar’ retail is the most common method of purchasing gold in India
and various lockdowns have prevented customers from visiting these stores
during the pandemic. These physical shop-owners commonly use discounting as a
tactic to drive interest in the metal and the start of June saw discounts of up
to $12 an ounce offered, the largest seen since September 2020. Furthermore,
whereas gold purchases would traditionally take place in smaller, family-run
stores in India, many consumers are now turning to larger, retail-style chain
stores that are less crowded and afford more space and distance to shoppers.[5]
Cryptocurrency Volatility
A World Gold Council report released at the beginning of
June[6]
suggested that gold has proved to be one of the most stable asset classes from
a volatility perspective; both during the market disruption seen throughout the
pandemic and during the subsequent rebound. This is because the value of gold
in recent months has remained more or less stable, especially when compared to
other investment options such as cryptocurrencies, which have demonstrated
significant volatility over the last two years. For this reason, the World Gold
Council continue to advocate gold as a safe haven and an effective diversifier,
particularly within portfolios that also hold riskier assets.
Learn more about our Physical Gold ETC here.