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North American ETFs Gobbled Up Gold Last Month, Leading Global Increase in Fund Inflows

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North American funds gobbled up gold last month as gold-backed ETFs collectively added 22.5 tons of the yellow metal globally in March.

Overall, gold-backed ETFs increased their holdings to 2,415 tons worth an estimated $102.8 billion, according to data released by the World Gold Council.

North American funds led the way, adding 21.5 tons of gold valued at $917 million to their holdings during March. So far this year, North American funds have accounted for 85% of total net inflows.

Asian funds added assets for the third consecutive month increasing their gold holding by another 3.1 tons. Asian ETFs have grown assets by 13.4% through the first quarter of 2018.

European funds led ETF growth in 2017, but that trend has slowed significantly. European gold-back ETFs saw net outflows of about 1.1 tons last month.

According to the World Gold Council, a significant portion of inflows in March resulted from periods of sharp price rallies on strong volume, especially in the second half of the month.

Gold’s price performance and volatility were driven by global trade tensions, a weaker US dollar, and weak stock market performance. As stock markets tumbled, investors moved into bonds and gold. Gold is one of the best performing asset classes this year, having rallied 2.5%.”

Overall globally, funds have recorded net inflows of gold so far in 2018. Inflows 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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