The recent Bank of England Base Rate cut has led to a surge in demand from people wanting to invest in gold, says the Royal Mint.
It saw a 25% increase in transactions on its bullion website in the first week of August, as well as a 50% increase in sales of gold bars and coins, compared to the previous week.
Falling returns on cash and bonds as a result of the Bank of England’s decision to cut rates is thought to be making investors turn to gold.
The price of the precious metal has soared this year, up 45% in sterling, thanks partly to the weakening pound. It is up 25% in dollars from $1,060 to $1,330.
“There has been a veritable gold rush this year, as global economic woes and loose monetary policy have attracted investors to the yellow metal in their droves, and it’s no surprise that the Bank of England’s interest rate cut has exacerbated this trend,” says Laith Khalaf, senior analyst at investment company Hargreaves Lansdown.
The news from the Royal Mint comes in the same week that the World Gold Council announced that investment demand for gold hit a record high in the first half of 2016.
“The ongoing clatter of the printing presses in central banks across the UK, Japan and Europe also helps give gold a leg up, as it is a hedge against currency devaluation,” says Khalaf.
Not the holy grail
However, investors need to remember that gold isn’t the holy grail of investments – it can suffer just like any other asset class. Back in 2011 gold was trading at $1,800 an ounce, it is now 25% below that.