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

Gold Flowing Into ETFs Again

  by    0   1

In 2020, gold-backed ETFs recorded record net inflows of gold. Funds added nearly 231 more tons in 2020 than they did during the previous record year (2009/646 tons). But with declines in the price of gold and investors pivoting to riskier investments as economies improve, we’ve seen net outflows of gold from ETFs over the last three months.

That trend reversed in May as gold-backed funds globally added 61.3 tons of gold, according to the latest data from the World Gold Council.

Global assets under management(AUM) now stand at 3,628 tons totaling about $222 billion. That’s about 9% shy of the August 2020 high of $240 billion and 7% shy of the October 2020 tonnage high of 3,908 tons.

The World Gold Council said inflows of gold into ETFs last month reflect increasing investor interest in the yellow metal.

We believe this to be largely a function of investment demand increasing with the price strength of gold, along with renewed inflation concerns in the market, a weaker dollar and lower real yields.”

North American funds led the way, adding 34.5 tons of gold to their holdings in May.

European funds weren’t far behind, recording net inflows of 31.2 tons. Larger funds UK and Germany were the primary drivers of  European flow.

Asian ETFs charted outflows of 3.3 tons. Almost all of the Asian outflows were from Chinese funds. That country saw strong local stock market strength. Even with the May outflows, Asian gold ETF holdings growth remains above 11% in 2021.

Funds listed in “other regions” including Australia saw outflows of 1 ton.

The WGC listed several factors driving the recent strength in gold.

  • Higher inflation expectations
  • The weaker US dollar
  • Positive gold sentiment and price momentum.

Anecdotally, some additional supporting factors include:

  • Gold prices catching up to other commodities ‘reflation’ strength.
  • Strong Holiday demand in China, and
  • Increased central bank demand.

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 Guide Today

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

Singapore Adds Gold to Reserves for the First Time in Over 2 Decades

Singapore expanded its gold reserves by about 20% earlier this year, joining a growing number of countries increasing their investment in the yellow metal.

READ MORE →

Silver Demand Expected to Exceed 1 Billion Ounces in 2021

Every key area of silver demand is forecast to rise in 2021, according to the Silver Institute’s Interim Silver Market Review. The institute projects silver demand will come in at 1.029 billion ounces this year. That would mark the first year demand has exceeded 1 billion ounces since 2015.

READ MORE →

Jerome Powell 2.0

President Joe Biden has tapped Jerome Powell to serve a second term as chairman of the Federal Reserve. Biden said Powell’s “steady leadership” helped calm markets as governments shut down the economy due to coronavirus, and he expressed confidence in Powell’s future leadership. “I believe Jay is the right person to see us through,” Biden […]

READ MORE →

The Fed Pulled Off a Masterful Manipulation of the Junk Bond Market

The Federal Reserve pulled off a magnificent manipulation of the junk bond market, facilitated a massive wealth transfer from savers to speculators, pocketed millions of dollars, and then washed its hands of the matter. In March 2020, as governments shut down the economy for coronavirus, the Fed slashed interest rates and launched a massive quantitative […]

READ MORE →

Poland Plans to Add Another 100 Tons of Gold to Its Reserves

During a recent interview, Bank of Poland President Adam Glapiński said the central bank plans to add 100 tons of gold to its reserves in 2022. In 2018, the National Bank of Poland began aggressively adding gold to its reserves. Through the first half of 2019, the Polish central bank added more than 100 tons of […]

READ MORE →

Comments are closed.

Call Now