Royal Mint reports ‘flight to safety’

Royal Mint Precious Metals division achieves record investor numbers as ‘flight to safety’ among investors maintains momentum

• The Royal Mint announces a record number of customers investing in precious metals products in 2023, with a 7% increase in investors year-on-year
• A significant proportion of customers (77%) have been attracted by more affordable investment options including fractional coin and bars, and its digital platform, DigiGold
• In 2023, The Royal Mint’s Buy Back Scheme purchased more bullion from investors than ever before, a 46% increase from 2022
• 2024 outlook: precious metals could be boosted by central bank rate cutting cycle

The Royal Mint has seen a 7% year-on-year increase in customers purchasing bullion, as many global investors continue to move into precious metals investments to weather volatile financial markets.

The growth in customers is credited predominantly to investors opting for a ‘flight to safety’ approach to their portfolios as well as an increased range of products, particularly ‘fractional’ products, on offer. 77% of gold bar and coin investors served by The Royal Mint in 2023 purchased physical gold coins and bars smaller than the traditional 1-ounce size, known as ‘fractional’ products, as part of their investment portfolio, with the gold Sovereign, 1g gold bar and 1/10oz gold Britannia coin proving most popular.

The growing fractional coin and bar range reflects the company’s commitment to ensuring gold remains an accessible investment choice for investors at all price points, allowing customers to invest in physical gold from around £75. Its digital platform, DigiGold, also means customers can invest from just £25. In 2023, The Royal Mint’s gold sovereign coin remained as popular as ever, and the silver Britannia continued to be The Royal Mint’s flagship bullion product, topping the most popular product list of 2023.

Andrew Dickey, The Royal Mint’s Director of Precious Metals, comments: “The Royal Mint is committed to responding to market needs and, as part of this commitment, we have continued the development of our smaller, fractional products allowing entry level investment right up to our six-figure investment options. This has allowed more investors to purchase gold with us, with options to suit all needs. It is interesting to note that more customers made gold investments last year than during the lockdown investing ‘boom’ in 2020, highlighting the continued appeal of the asset class.”

While The Royal Mint has benefited from growing investor interest in precious metals, a number of existing investors have sold out of their asset allocations as gold hit an all-time high in sterling during 2023. The Mint has also seen a record number of investors selling their gold investments back to the business, a 19% increase y-o-y. In 2023, The Royal Mint paid out 46% more than in 2022 to customers selling their bullion, with many investors likely to have made substantial profits on their investments.

Dickey continues: ‘We’re able to offer investors competitive prices for their gold, silver or platinum bullion products, whether they bought them from The Royal Mint or not. We tend to see a mix of investors and inheritors selling gold coins, particularly Britannias, Sovereigns and Krugerrands. This service enables investors to realise a profit, and supplies The Royal Mint with metal it can re-sell or recycle. Additionally, many people don’t realise that in most instances, the profits investors make selling UK gold, silver or platinum coins are exempt from Capital Gains Tax.’

Commenting on the outlook for precious metals markets in 2024, Stuart O’Reilly, Market Insights Analyst at The Royal Mint said: “The potential for central bank rate cuts in 2024 is boosting the gold and precious metals market, as the prospect of lower rates boosts demand for non-yielding assets. Traders and investors are increasingly pricing in a Fed rate cut some time in 2024, which could accelerate the price of gold alongside a weakening of the US dollar. The dual impact of this move could turbocharge gold beyond recent market highs, as recent geopolitical and economic uncertainty, alongside strong central bank gold buying, has kept precious metals markets elevated. 2024 is also shaping up to be a record year for elections worldwide, with more people than in any other year having the opportunity to cast a ballot. With elections in the US, EU, India, Russia, South Africa, Taiwan and potentially the UK, we could see unexpected shifts in geopolitics. The lesson of recent years is that nothing is clear-cut, particularly in volatile markets which remain unpredictable.”

Approaching 2024, Dickey added: “I am delighted that we have maintained our positive trajectory in 2023 and continue to onboard so many new investors who are looking to hedge against macroeconomic uncertainty and benefit from gold’s long-term price growth. Looking ahead, we see further significant opportunities to apply our expertise and experience in precious metals to continue our push into global markets and develop new products to support to attract investors to our platform. We are increasingly excited by opportunities around our Gold for Pensions proposition, and our gold ETC product on the London Stock Exchange – both of which have grown despite tougher conditions in these markets. More and more investors appear to be increasingly aware of the potential benefits of holding gold in a well-diversified portfolio and value The Royal Mint’s expertise and market-leading product features.”