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Investors buying physical gold as Middle East crisis ratchets up


The gold price has gained almost 9% in the two weeks since the Hamas attack on Israel, and this flight to safe-haven assets is reflected in a 260% increase in demand for gold coins and bars at The Pure Gold Company, compared to the average weekly demand in 2023, the company reported this week.

“Stock markets seemed to shrug off the attacks initially, but investors were clearly worried because the gold price was on the rise. It feels like the panic is setting in – we have seen enquiries for both gold and silver at an all-time high,” Josh Saul, CEO of the gold investment firm said.

The Pure Gold Company offers a curated investment service which means they will discuss clients’ needs to ensure they are offered the right product. Through this direct communication, they understand who is buying and why (compared with online gold sellers who don’t have the same depth of insight).

“Demand for gold within Self Invested Personal Pensions (SIPPs) has also jumped by 300% in the last week. Our customers approaching retirement want to ensure they don’t lose value at a crucial time in their lives,” Saul said.

Risk of contagion growing

The risk of contagion grows the longer the conflict continues, and if it spreads beyond Israel’s borders the geopolitical ramifications could be very severe. The oil price is already up in response to the conflict, and if its keeps rising, inflation could start to increase again. We were only just starting to recover from an inflation-induced recessionary environment, and this could seriously impact market volatility.

“Our customers are buying gold to protect their assets and act as a safety net because the safe-haven properties of gold come into their own during times of volatility,” said Saul.

Markets were subdued for the first week, but as the invasion has escalated into war, the perceived risks have increased, and stock markets have started to lose ground. Rate rises have already dampened the property market, and further uncertainty can only add more pressure there. Gold has a long history of maintaining its value when other assets are falling.

Because The Pure Gold Company’s sales to retail investors are guided by their consultative approach rather than just purely online, Saul says he gleans the underlying motives of his clients, can speak around trends in retail investment in physical gold – with geopolitical tensions, economic and banking worries, currency concerns, and the expectations for the gold price all featuring prominently.

“Some of our customers are specifically looking to remove their wealth from the banking system, because for them the global financial system becomes uncertain in times of war or terror,” he explained. “The added benefit of tax-free gold, depending on individual circumstances, creates a compelling case for buying physical gold.”

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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