Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Gold Flowed into Asian and European ETFs in August, But North America Continues to See Outflows

  by    0   0

Gold flowed into European and Asian ETFs last month, but outflows from North American funds pushed total global holdings lower.

Funds listed in China drove Asian ETF stocks of the yellow metal up last month. Asian ETFs added 2 tons of gold in August as investors hedged trade risks and currency weakness. Asian funds have seen an impressive percentage increase in 2018, growing by 9.1% year-to-date, according to data released by the World Gold Council.

European funds also added gold in August. Holdings grew by 4 tons last month. European-based ETFs have led the way so far this year, adding $2.3 billion in gold (5.7% AUM) to their holdings year-to-date.

Global outflows were led by North American funds, which lost $1.65 billion, driven by a combination of momentum – as the US dollar gold price fell by more than 2% on the month – and a risk-on appetite by US investors in the face of an expanding economy.  Forty-four tons of gold flowed out of North American funds. It was the fourth straight negative month for North American gold-backed ETFs. The outflow of gold from ETFs isn’t surprising in light of the decline in the dollar price of the yellow metal.

There were also outflows in other regions as countries facing currency crises used gold for liquidity, according to the WGC.

Funds in South Africa and Turkey suffered losses as the rand and lira depreciated sharply. In Turkey, anecdotal evidence suggests that investors have been using gold as a source of liquidity, and we believe South African investors may have acted similarly.”

Globally, holdings in global gold-backed ETFs and similar products fell by 40 tons to 2,353 tons in August – the third consecutive month of net-outflows.

The WGC said there are signs we might be set up for a rally in the price of gold.

Recent reports of COMEX futures show extreme short positioning as gold’s pullback generated additional selling pressure from money managers. Money managers’ net longs have not been this negative since data became available in 2006, and non-commercial non-reporting net longs turned negative earlier this month for the first time since 2001. But such negative positioning has historically preceded rallies in the price of gold.”

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.

Get Peter Schiff’s most important Gold headlines once per 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

The Fed “Out-Doves” Expectations While Doing Nothing

The Federal Reserve wrapped up its final Federal Open Market Committee meeting of 2019 on Wednesday doing pretty much what was expected — nothing. But in the processing of doing nothing, the central bank said a lot and managed to out-dove expectations. After cutting interest rates three times in 2019, the FOMC stood pat during […]

READ MORE →

The Wealthy Are Hoarding Physical Gold

The world’s rich are hoarding gold – this according to data buried in a recent Goldman Sachs note to clients. In the note published over the weekend, Goldman recommended diversifying long-term bond holdings with gold, citing “fear-driven demand” for the yellow metal.

READ MORE →

New Debt Record; Americans Propping Up the Economy With Money They Don’t Have

American consumers are still propping up the economy spending money they don’t have. But how long can it last? After a  slight slowdown in September, consumer borrowing jumped again and set another new record in October, according to the latest data released by the Federal Reserve.

READ MORE →

Central Banks Keep Right on Buying Gold

Globally, central bank gold reserves charted another healthy gain in October as they continue their quest to diversify reserves away from the US dollar. Central banks added another net 41.8 tons of gold to their reserves in October, according to the latest data from the World Gold Council.

READ MORE →

Top Slovak Party Leader Wants the Country to Bring Its Gold Home

A top Slovak political party official said his country should bring its gold home because even its allies cannot be trusted with it. Ex-Premier Robert Fico chairs the biggest party in Slovakia. Last week, he called for a special parliamentary session on the country’s gold. He said the country’s gold reserves are not safe in […]

READ MORE →

Comments are closed.

Call Now