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LONDON – The sabre-rattling between the US and North Korea is making investors nervous, pushing them into safe assets.
Gold dealer the Pure Gold Company said its average trade size has increased from $15,500 (£12,000) over August to $34,875 this week.
Meanwhile its average largest daily trade size increased more than 120%, from $625,000 to $1,406,250.
CEO Josh Saul said: “Over 64% of all physical gold sales this week have come from those in financial services including banking, accountancy and those in the hedge fund space.”
“Many of these clients recall the effect on financial markets when Russia attacked Ukraine or when the USA went into Iraq, and are looking to protect their assets from market decline,” Saul said.
Market volatility jumped as traders reacted to growing tensions between the USA and North Korea despite US Defence Secretary James Mattis saying that any conflict between the two nations would be “catastrophic.”
The VIX, a measure designed to track stock market fear, has jumped from its lowest level in 24 years to hit a level not seen since April this year, climbing 45% in a single day, marking its eighth largest one-day jump in history.
Gold, considered a safe asset in times of uncertainty, has also been rising steadily. Here’s the chart:
“First time buying has increased 76% this week, and many say the source of funds for their gold investment is coming from low interest savings accounts and ISA funds,” said Saul. “Fear and uncertainty within politics, international relations and national security are provoking the financial markets and people are unsure how this could affect their wealth.”