April 5, 2013 - Since the beginning of the financial crisis, safe-haven investors in Britain have ploughed hundreds of millions of pounds into gold.

Following the nationalization of Northern Rock, the UK was falling into recession as one of Wall Street’s biggest investment banks teetered on the edge of bankruptcy. At the time, one asset was just beginning to soar: gold.

This week marks the five-year anniversary the price of an ounce of gold shot through the $1,000 per troy ounce level and at this time there have never been more private gold traders or individual investors looking to store their value in precious metals.

BullionVault, which operates vaults in London, New York, and Zurich, shows there has been a nine-fold increase in the number of gold bullion traders in the past five years, with Britons being some of the most enthusiastic buyers. Many of them, according to BullionVault, choose to keep their investments in Switzerland.

BullionVault estimates that its customers in Britain now hold 32.9 tonnes of gold bars valued at 1.11 billion GBP, over ten-fold the value of British holdings in their vaults five years ago.

Adrian Ash, BullionVault’s head of research in London said consumers decide to put their hard-earned money into physical gold for many reasons. He said in the main it’s to diversify away from other investment markets, to hedge against inflation or as crisis insurance if they fear global financial instability. Whatever the reason, he added, it’s clear that the last five years has seen unprecedented demand for gold.

Strong demand for physical bullion with limited supply has contributed to pushing prices so high in markets.

Danny Cox of financial advisers Hargreaves Lansdown said over the last five years the financial crisis pushed investors towards gold as a safe haven asset and we have seen central banks such as Russia and China being big buyers of gold. He added that speculative investors have also been attracted and there has also been an increase in demand for gold jewelry, particularly from India and China.

Historically, gold performs well when the stock markets are rallying. The price of gold has fallen back somewhat this year as Wall Street and the FTSE index reached five-year record highs, though the safe haven demand in the precious metal continues to be strong as Mints around the world report record sales demand for physical bullion.

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Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org