The UK Investor Magazine met with the Royal Mint to explore the demand dynamics for gold and the factors at play driving gold to record highs.
Gold has recently traded at record highs around $2,140 per ounce as the promise of easier monetary policy drove prices higher.
Over the past two years, financial markets experienced a significant shift when the Federal Reserve, along with central banks globally, raised interest rates to the highest levels in over two decades in response to mounting worries about surging inflation.
“Gold is an inherent store of value,” said Precious Metals division director at the Royal Mint Andrew Dickey to UK Investor Magazine.
Gold Safe Haven Status
Macroeconomic instability, concerns about inflation, and ongoing wars in the Middle East and Ukraine have seen gold prices above $2,000 four times in the last six months.
“It has always been seen by investors as a safe haven and a hedge against macroeconomic instability,” Andrew Dickey added.
Gold, silver, and platinum have all fluctuated this year. Andrew Dickey explained that this volatility is what brings customers and investors in.
Gold price rallied substantially during the pandemic and has largely held its value since. The “appetite and demand for Bouillon investment have really continued,” Dickey explained.
The Royal Mint has experienced growing demand for its collection of coins, bars and recently launched digital gold.
A diverse group of investors
The Royal Mint sees gold as increasingly appealing to a diverse group of investors. More specifically, for example, the Royal Mint has attracted the highest number of millennial investors than ever before.
The popularity of fractional coinage and digital range has been a driver of the Royal Mint’s welcoming of new customers and investors.
Fractional coinage and Digi gold, silver, and platinum products allow investors to invest amounts from £25.00 in digital fractional gold, silver or platinum coins.
The Royal Mint has experienced a record-breaking number of young and beginner investors, as the ability to invest smaller amounts into silver, platinum, and gold is what later makes investing in high-value gold more accessible.
Through Digi Gold, Platinum, and Silver, investors can now buy fractional coinage that is stored at the Royal Mint‘s vaults in the form of 400-ounce gold bars.
Smaller physical bars have also helped welcome younger to gold investment.
“The average age of investors has dropped since the introduction of smaller bars,” said Andrew Dickey.
What is also important to stress is that, according to Andrew Dickey, as recently as 5 years ago, “only 7% of our customers were women; now the number is up 20%,” he said. This is generally due to the fact that gold has become more affordable for everyone. More parents can now open a savings account for their children at the Royal Mint and invest as little as £25 a month.”
Further, “recirculation of coins through the secondary market” has also been helping the market; these coins are able to “hold up their value pretty well,” said Andrew Dickey.
Since the death of Queen Elizabeth, Andrew Dickey explained, the Mint has seen a sharp rise in people reselling Britannica coins with the Queen’s effigy on them. The 2024 King Charles’s effigy coins are no less popular now.