ETF Gold Holdings Hit Highest Level Since March 2013
Gold holdings in gold-backed ETFs globally surged to the highest level in over six years in July.
Gold-backed ETFs added 52 tons of gold last month, with net inflows totaling $2.6 billion, according to the latest data released by the World Gold Council. This follows on the heels of a June increase that totaled 127 tons.
Globally, gold-backed funds now hold 2,600 tons of gold. That’s the highest level since March 2013.
The WGC says a combination of economic concerns, trade tensions and geopolitical risks, along with global monetary policy shifting to a more accommodative stance, all helped drive inflows of gold into ETFs.
Gold flowed into ETFs in every region of the world in July. North American funds led the way, adding 43 tons of the yellow metal.
European listed funds brought in 7.5 tons of gold. ETFs in Europe have seen net-positive flows of metal in every month this year, except April. According to the World Gold Council, “Looming concerns over Brexit, generally weaker currencies, negative interest rates, as well as other idiosyncratic risks, have supported gold investment demand.”
Speaking of Brexit, UK-based fund holdings charted all-time highs in July, reaching 556 tons. That represents 21% of global gold-backed ETF assets.
Asian funds added 0.8 ton of gold in July. Chinese funds increased holdings as investors reacted to a significant gold price increase in local currency.
On the year, gold-backed ETFs have added a net 159 tons of gold despite outflows of metal in February, April and early May. Strong inflows in North American-listed funds in June and July have increased that region’s contribution to 2019 growth. North American ETFs have added 73.5 ton so far this year, compared to 94.6 tons in Europe
Inflows of gold into ETFs are significant in their effect on the world gold market, pushing overall demand higher. Gold demand was up 8% through the first half of 2019. The World Gold Council listed inflows of metal into g0ld-backed funds as one of the factors driving demand higher.
ETFs are backed by physical gold held by the issuer and are traded on the market like stocks. They allow investors to play gold without having to buy full ounces of gold at spot price. Since their purchase is just a number in a computer, they can trade their investment into another stock or cash pretty much whenever they want, even multiple times on the same day. Many speculative investors appreciate this liquidity.
There are good reasons to invest in ETFs, but they aren’t a substitute for owning physical metal. In an overall investment strategy, SchiffGold recommends buying gold bullion first.
When considering gold-backed ETFs, you should always keep in mind that you don’t actually own the gold. Buying the most common ETFs does not entitle you to any actual amount of the precious metal.