Physical gold demand is on the rise. Are the US recession rumors and trade war with China the reason?

Christopher Zenios11/06/20192min
The Pure Gold Company reported that it has seen a 378% increase in first-time investors purchasing gold bars and coins compared to the weekly average for 2019. Furthermore, there has been a 63% increase in financial professionals and bankers investing in physical gold, as the firm states. Many investors seem to be deeply concerned there will be a severe global recession driven by systemic geopolitical risks. The catalyst for the most recent spike in demand for gold appears to have been the tariffs imposed on Mexico by Donald Trump last week which combined with the trade wars between China and the USA, adds to fears that a slowdown in global trade could potentially spark a global recession with enduring consequences.

China extended its gold-buying spree, adding to reserves for a sixth straight month, as the protracted trade war with the U.S. hurts growth expectations and boosts demand for a portfolio diversifier.

The People’s Bank of China also increased its bullion reserves in May by 15.86 tons, after almost 58 tons of gold were added to the nation’s stockpile in the five months to April. The rise reflects the government’s “determined diversification” away from dollar assets.


The Pure Gold Company states that its clients are not purchasing gold for growth, it’s more about safety and security in the event of market failure. The trend is simple – as most asset classes fall in value, gold tends to increase and for this reason, people purchase the yellow metal in anticipation that equities and property prices continue to be volatile.


Compared to gold ETFs and gold funds, physical gold is easily transferable and very quickly liquidated anywhere in the world. A gold-backed ETF is supposedly backed with 100 per cent physical gold, but many people, including bankers, believe that given gold’s finite availability, it is impossible for every certificate holder to be backed with 100 per cent metal.


Physical gold not only removes wealth from the financial system, but it is also used as a hedge against the uncertainty of both currency movements and market volatility as part of a balanced portfolio. Some investors might put up to 15 per cent of their wealth into physical gold, while others who have just sold a property and plan to buy another in the next year or so invest much more than that in gold. Depending on the balance of assets, some don’t actually want to see their gold increase, because that would indicate that other assets like equities are falling.

Christopher Zenios

Christopher has always been a pioneer, a first adopter when it comes to technological advancements. Over the years, his expertise surrounded the real estate and digital markets and their evolution in today's society. After being the editor to various professional business news portals and blogs, he was selected to become the chief editor for HWC. Contact Christopher at +357-22029786 ext: 6110 or by email at [email protected] for editorial related questions.

About us

High Worth Citizen is all about delivering the latest business news on finance, investment, real estate and wealth. Our readers are the rich and powerful, their associates and business partners, the global High Net Worth Individuals.