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North America Led the Way as Gold Continued Flowing into ETFs Last Month

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In 2017, nearly 200 tons of gold flowed into gold-backed ETFs. That positive trend continued in January, according to a report released today by the World Gold Council.

Gold-backed ETFs added 27.6 tons last month, growing assets by 5%. Global gold-backed ETFs collectively held 2,396 tons of the yellow metal at the end of January with a  value of about $103.6 billion.

For the first time in several months, North American funds saw the biggest increase. US-listed ETFs accounted for 73% of global net inflows in January, reversing the 2017 trend in which European funds dominated net inflows. North American funds added 21.5 tons of gold last month valued at about $940 million.

European funds also saw net inflows, adding 7.6 tons in January. Asian funds had net outflows of 1.4 tons during the month. Other regions saw marginal outflows of 0.1 tons.

Inflows of gold into ETFs over the last two years and continuing into 2018 reverse a 3-year trend of outflows between 2013 and 2015.

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

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