Gold Trading Sinks As Bitcoin Interest Surges

Metals trading network BullionVault saw gold trades shrink last month by a third, compared to the previous 12-month average, in a year that has typically seen the number of gold buyers rise. Gold trades also fell 9.7% in October from the month before even as gold prices dropped against all major currencies.

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This saw the Gold Investor index, a measure of sentiment towards physical gold, move one tick higher from 54.5 in September to 54.6 last month, exactly matching the sentiment index's one-year average, BullionVault said.

The index, would read 50.0 if the number of buyers and sellers were perfectly equal, and peaked at 71.7 when gold prices set all-time record highs in September 2011.

Director of research at BullionVault Adrian Ash said: "With the US stockmarket setting fresh all-time highs day after day, it is no surprise gold prices have retreated.

"Investment insurance is being discounted because equities seem invincible. Brexit is not worrying the FTSE, and Catalonia's independence crisis has so far failed to dent Europe's bull market."

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Meanwhile, worldwide data from Google Trends show the number of internet searches for the phrase "buy Bitcoin" is now overtaking "buy gold" after overtaking "buy silver" at the start of 2017.

Ash said that some investors are "being distracted by the noise around Bitcoin and other crypto currencies".

He said: "Altogether that has made interest from new gold investors the weakest since the metal's half-decade price lows of end-2015, just the UK referendum and Trump's election shock helped gold enjoy its strongest annual rise in six years."

"While Bitcoin steals financial headlines and clickbait, rising gold demand among larger investors matches the trend reported among some wealth managers and, in Germany, a solid upturn for institutional gold investing."

BullionVault found that while the number of gold trades fell, total client holdings grew by 208 kilograms in October, the first net growth in three months.

Silver holdings meanwhile remained unchanged for a second consecutive month at a record 689 tonnes, but the number of buyers fell harder than sellers, down 22.1% from September.

Despite holding 56 more tonnes of silver than at this point last year, BullionVault users now show the slowest 12-month pace of silver acquisition since the start of 2016, when silver prices bottomed and turned higher from six-year lows.

October also saw the fewest-ever silver traders as a proportion of existing owners, while the proportion of gold investors who bought or sold across the month also fell below 10%, the lowest level since gold prices bottomed at 6-year lows and turned higher in January 2016.