Rising demand for gold bullion delivers record profits for The Royal Mint
The Royal Mint has announced record profits from increasing precious metal sales as investors look for a safe haven for their money amid volatile financial markets, spiking demand for gold coins and gold bars.
The world’s most prestigious export mint reported pre-tax profits of £18 million to March 31st, 2022 – up £5.6 million on the previous financial year. Notably, precious metals accounted for around 50% of profits and 86% of its £1.4 billion total revenue, up from £1.1 billion.
The Royal Mint’s chief executive Anne Jessopp said profits had been entirely driven up by its consumer facing division as record numbers or investors turned to physical gold, silver and platinum coins and bars to hedge their portfolios.
As an official partner of The Royal Mint, we can confirm we’ve seen an increase in demand and interest in gold coins and gold bars, including those supplied by The Royal Mint, as many people look to invest in an asset that could help them weather the current inflationary storm.
Ms Jessopp highlighted that this is not just coming from the traditional audience for gold. Rather, she mentioned the mint has seen a ‘significant growth’ in the number of women and young people investing in precious metals, as well as parents and grandparents investing in gold for their children.
So, what factors are driving this demand? And what does it mean for the price of gold? Given the current economic turmoil and geopolitical environment, is this a sign that you should invest in gold now?
UK Bullion is well-placed to provide insights into the current market situation and highlight certain quality gold products to meet the increasing interest in precious metals. In this article, we explore the key factors behind the rising demand and how it could impact the price of gold. We’ll also look at some gold price predictions for the rest of the year and into 2023.
What’s driving current interest in gold?
Historically, gold outperforms other asset classes during periods of economic turbulence due to its universal appeal as a finite asset held by most central banks.
In July, we looked at gold’s performance in the first six months of 2022 and predicted continued investment in gold as a safeguard throughout 2022 and 2023. Indeed, we’ve seen this playing out – but what’s driving the demand? There are two reasons that drive most gold investments:
Gold is considered the ultimate safe-haven investment during periods of high inflation and turbulent global markets when the value of stocks and bonds tends to decline. Many investors turn to gold to protect the value of their wealth with diverse portfolios to hedge against risk. And historically, increased demand for gold leads to a rise in price.It doesn’t take a political analyst to tell us that now is a time of particular turbulence around the world, so we would expect to see demand remain high if not increase amid these circumstances.
- Value retained over time
Secondly, gold has proven its value lately as a long-term investment. At the time of writing, November 7th, gold is priced at £1,465 per troy ounce – up from £1,343.6712 on January 5th and £1,424.5392 as we recorded on July 20th.While we haven’t seen the price shoot up, investors have been buoyed by the steady value of precious metals at a time when stocks and shares have been in turmoil.
While these two driving factors provide a constant influence over investors, there are some more current events also impacting on the gold price.
In the past few years, we’d be forgiven for thinking the economic outlook is bleak. We’ve seen ongoing political uncertainty caused by Brexit, the global impact of the COVID-19 pandemic, and more recently the conflict in Ukraine. Now, in the face of a cost-of-living crisis, the US, UK, and Europe are reporting inflationary figures hovering around 9% to 10%, renewing recession fears.
Recent gold price fluctuations
A strong US dollar has certainly had its part to play when considering the gold price in the UK; however, the UK’s recent political woes go beyond this and investors would be wise to take a broad look at the market going forward into 2023.
Gold prices rallied as financial markets plunged after former Chancellor Kwasi Kwarteng announced billions of pounds of unfunded tax cuts in his minibudget on September 23rd.
Markets have responded more positively to Rishi Sunak since he became the UK’s third Prime Minister in less than three months on October 25th. The pound climbed 0.4% against the dollar to $1.1327 as Mr Sunak delivered his first speech in which he stressed the UK’s ‘profound economic crisis’.
Rates between the two currencies are holding around $1.15; however, the fiscally conservative Mr Sunak now faces the arduous task of restoring credibility to the UK’s finances amid economic chaos.
Longer term market confidence remains uncertain – at least until the November 17th budget is announced, although many analysts believe a UK recession is now inevitable.
Gold price predications for 2022 and 2023
Given the global economic turbulence, making accurate predictions at a time like this can be challenging.
However, the London Bullion Market Association (LBMA) is optimistic due to unprecedented demand. The trusted international trade association responsible for setting gold prices in the London gold and silver market announced extremely positive gold price predictions on October 18th.
Following discussions with its global client base comprising investors, gold-holding central banks, mining firms, producers, and refiners, LBMA forecast gold prices would increase from US$1,650 an ounce to US$1,830.50 (£1,597) in a year.
Nicky Shiels @nixsa84 October 19, 2022
Just attended the annual LBMA (Gold) conference in Lisbon. Polling takeaways from delegates: they are mildly bearish Gold for the year ahead ($1830 by 2023s conference) but super bullish Silver ($28.30!) as the focus was on physical tightness driven by unprecedented demand
— Nicky Shiels (@nixsa84) October 19, 2022
How to invest in gold
If you’re considering investing in gold over the next year, take a look at some of the gold bars and gold coins available with UK Bullion.
Gold Sovereigns and Gold Britannias (minted in 1/10oz, 1/4oz, 1/2oz, and 1oz sizes) are popular collectible coins. Coins command a premium over the same amount of gold found in gold bars. The slightly higher price accounts for associated production costs of coins and because they are collectible.
If you are a collector, first-time investor or looking to shore up your portfolio, you might want to consider The Royal Mint’s coins featuring the portrait of Queen Elizabeth II or keep an eye out for the new coins being released as King Charles III begins his reign.
Gold bars are available as parts of an ounce, multiples of one troy ounce, grams, or kilograms, and again as parts or multiples of these units of weight, typically sold by the gram or ounce and should have the purity, manufacturer and weight stamped on the face of the bar.
Prepare your portfolio for an historic 2023
2023 looks set to be an historic year for gold investments. Whatever your gold investment requirements, the UK Bullion team is available to provide insights and answer any questions.
Why not contact our dedicated team on 01902 623 256 or email us? Alternatively, you may wish to book a face-to-face appointment at our head office in Wolverhampton.
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