The Pure Gold Company has reported a 93% increase in enquiries over the weekend (compared to the average over the last 12 months) as investors react to the prospect of the UK finding itself with its seventh Prime Minister in just over a decade.
The surge comes as customers express concerns over what another change in political leadership could mean for markets, taxation, inflation and the broader direction of the UK economy.
According to The Pure Gold Company, many of its long-standing customers have seen this story before. More than 55% of the firm’s customers have continued purchasing physical gold over a period of between five and ten years, giving them first-hand experience of previous periods of political upheaval, including the leadership changes that followed David Cameron’s resignation.
Josh Saul, Chief Executive of The Pure Gold Company, said: “Many of our customers remember exactly what happened during the last period of political instability. Leadership contests, changing economic priorities and uncertainty over taxation created an environment where investors felt exposed. What we are seeing now is a renewed desire to prepare for that possibility again.”
“Customers are not telling us they expect the world to end. They are telling us they expect uncertainty. History shows that markets dislike uncertainty and investors naturally look for assets that can provide stability when confidence elsewhere comes under pressure.”
The company says concerns being raised by customers include the possibility of further pressure on UK property prices, increased volatility in equity markets, persistent inflation and uncertainty surrounding future tax policy under a new administration. Whilst some investors believe gold prices could benefit from increased demand, The Pure Gold Company says growth is not the primary motivation behind most purchases.
“Our customers are not buying gold because they expect to get rich from political uncertainty,” Saul continued.
“They are buying it because they want a form of wealth that sits outside the traditional financial system and has historically performed its role as a hedge during periods of economic and political stress. If gold rises, that’s a bonus. The primary objective is protection.”
The tax treatment of physical gold also remains a key attraction for UK investors. Certain UK legal tender bullion coins, including Britannias and Sovereigns, are exempt from Capital Gains Tax for UK residents, whilst remaining highly liquid and easily tradable.
The company has also reported a significant shift in retirement planning behaviour.
Over the last four weeks, enquiries relating to the transfer of pension and SIPP assets into physical gold have increased by 193%, with investors seeking to reduce exposure to traditional equity markets and diversify into physical precious metals.
Saul added: “One of the most common themes we are hearing is that investors feel they have become overexposed to conventional assets. Political uncertainty is simply reminding people of the importance of diversification.”
“No one knows who will be leading the country by the end of the week, who will be setting fiscal policy by the end of the month, or what the next Budget could look like. For many investors, that uncertainty alone is enough reason to revisit how their wealth is protected.”
