Contact us
CALL US NOW 1-888-GOLD-160

ETFs Chart Strong Inflows of Gold for Second Straight Month

  by    0   4

Gold flowed into gold-backed ETFs for the second straight month in February.

Net inflows of gold into ETFs globally totaled 35.3 tons last month. Total ETF gold holdings globally ended February at 3,650.6 tons, according to the latest data from the World Gold Council.

On the year, gold-backed ETFs have recorded net inflows of 81.6 tons.

Decades-high inflation and heightened market volatility continued to boost gold investment. Geopolitical risk also factored in last month as tensions between Russia and Ukraine rose.

The breakdown of flows by region last month was similar to January with North American and European funds charting strong inflows, more than outweighing outflows from Asian funds.

North American funds added 21.5 tons of gold in February. Larger funds saw the biggest increases in absolute terms, but virtually all North American funds grew at a similar rate. According to the WGC,  persistently high inflation, along with the Russian invasion and corresponding economic sanctions considerably reduced expectations of more aggressive interest rate hikes from the Fed. This has created some tailwinds for gold.

European-based ETFs charted inflows of 21.4 tons of gold.  Elevated headline inflation reports defied expectations last month. This was primarily due to soaring food and energy components. This helped drive gold investment in the eurozone. The Russian-Ukraine tensions exacerbated inflation fears due to its implications for energy supply in the region.

Asian funds continued to sell gold with holdings dropping by 7.4 tons last month. The bulk of these outflows was driven by Chinese ETFs. According to the WGC, this was likely due to tactical selling as the gold price surged, while local equity markets remained positive over the month. There was also profit-taking in India.

Holdings in other regions including Australia were flat on the month.

The price of gold rose 6% in February.

In 2021, gold ETFs saw global outflows of 173 tons, as large North American funds lost assets in line with lower gold prices. The realization that the Fed is not going to be able to fight inflation without tanking the economy along with the geopolitical turmoil has given gold a boost through the first two months of 2021.

Inflows of gold into ETFs are significant in their effect on the world gold market, pushing overall demand higher.

There’s a difference between investing in gold-backed ETFs and physical gold. Learn more here.

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.

Download SchiffGold's Gold vs GLD EFT's Free Guide

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Chinese Central Bank Halts Gold Acquisitions

China has called quits on its 18-month gold buying spree, causing precious metal prices to stumble this week as the world’s largest buyer unexpectedly closes its tab. In 2023, the People’s Bank of China purchased more gold than any of the world’s other central banks, swelling its reserves of the precious metal to more than […]


What a China-Taiwan Conflict Could Mean for Semiconductors, Gold

American-made weapons will soon be bound for Taiwan, American lawmakers are telling Taiwanese President Lai Ching-te, sending shockwaves of uncertainty through electronics and metals markets this week.


Which Central Banks Are Selling Gold?

Central bank gold buying has been a significant factor in the yellow metal’s spectacular run-up to new record highs. But with its recent small correction downward, it’s a good time to look at which central banks are selling — and why.


Death of Iranian President Carries Gold, Copper to New Record Highs

Amid ongoing tension in the Middle East, Iranian President Ebrahim Raisi and the foreign minister have been confirmed dead Monday after a helicopter crash. The officials’ shocking demise casts additional investor doubt on a region already plagued by economic upheaval, with supply chain uncertainties fueling record-high metal prices this week.


South Korea’s New Way to Pursue Safety

While gold bullion is most often sold in bar or 1oz coin form, the Korean retail market is benefitting from gold’s latest success with a very atypical marketing strategy. It has been traditionally thought that investors prefer larger increments of bullion because they simplify calculations and have a lower transaction cost than buying the same amount of gold in smaller increments. Demand for traditional bars and coins in South […]


Comments are closed.

Call Now