MARKET NEWS

BY Pieter Snepvangers

Donald Trump’s tariffs left thousands of savers reeling last week as they saw the value of their pensions plunge.

But for one shrewd investor, the trade war sparked an opportunity, after they made almost £100,000 in the space of seven days purchasing $2m worth of gold bullion from a mobile app.

The anonymous investor, who is based in Zurich, purchased 20.44kg of gold on April 7 when the commodity was priced at $3,043 an ounce.

A week later and the price of the precious metal had soared to $3,229 an ounce meaning their $2m (£1.57m) investment was now worth an extra $122,232, equivalent to £92,847.

On Monday, gold bullion reached a new record high of $3,245 before falling back as Mr Trump excluded smartphones and computers from his reciprocal tariffs.

Gold, which has climbed 23pc so far this year, continues to attract demand as investors seek shelter from the “continued tariff-driven turmoil in global markets, raising concerns about a global recession and hopes for more monetary easing”, according to analysts at Saxo Bank.

Goldman Sachs has increased its year-end gold forecast to $3,700 (£2,804) as demand amongst central banks has grown and fears of a US recession loom.

As well as being perceived as a safe-haven asset, gold has grown in popularity with retail investors in recent years as mobile investing apps have lowered barriers to investing.

The Royal Mint has also introduced smaller-sized gold coins and bars, starting from £108, known as “fractional products” to further lower the entry point. In 2023, fractional products made up 77pc of all investments made at the Royal Mint.

The anonymous investor made their £1.5m investment using BullionVault – an app which enables you to purchase gold online to be held on your behalf in vaults.

Adrian Ash, of BullionVault, said: “The idea that investing in gold is only for the wealthy is an out of date myth.

“Today, investors can use their phone to buy and sell physical gold, safely stored at low cost in high security vaults.”

However, despite the record highs, gold remains a volatile investment. Between 1980 and 1982, the gold price fell by more than 60pc in the space of two years.

More recently, between 2011 and 2015, the value was wiped by 45pc as global economies recovered from the financial crisis and the US dollar strengthened.

Russell Gould, investment director at stockbroker AJ Bell, said many portfolio builders remain cautious of embracing gold because it offers no yield and “they can get returns from cash in the bank that currently exceed inflation”.

However, he added: “Central bank purchases of gold, plus substantial shipments into the US, are helping to drive the metal’s price higher, as are sticky inflation and ongoing concerns over lofty government debts on both sides of the Atlantic.

“It would be lovely to find out just who is importing so much of the precious metal into America that it is showing up on the US GDP numbers. But someone state-side seems worried, and real gold bugs may even be wondering whether the president’s team is looking at some sort of readjustment of America’s debt and the global currency system, rather as Richard M Nixon did all the way back in 1971 – and he started on that journey by introducing tariffs, too, as part of the so-called ‘Nixon shock’.

“All of these geopolitical and financial considerations massively outweigh any flows created by the buying or selling of jewellery. If anything, higher gold prices are likely to dampen demand for jewellery, in a classic example of how the best cure for high prices is high prices.”