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ETF Gold Holdings Hit All-Time High

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Includes: AAAU, BAR, DGL, DGLD, DGP, DGZ, DZZ, GLD, GLDI, GLDM, GLDW, GLL, IAU, IAUF, OUNZ, PHYS, QGLDX, SGOL, UBG, UGL, UGLD
by: SchiffGold
Summary

Globally, gold-backed ETFs added 75.2 tons of metal to their holdings last month.

That brought total gold holdings to 2,808 tons, eclipsing the previous record set back in 2012, when the price of gold was near $1,700 per ounce.

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

By SchiffGold

ETF gold holding reached all-time highs in September.

Globally, gold-backed ETFs added 75.2 tons of metal to their holdings last month, according to the most recent data released by the World Gold Council. That brought total gold holdings to 2,808 tons, eclipsing the previous record set back in 2012, when the price of gold was near $1,700 per ounce.

Global ETF gold holdings have grown by 368 tons on the year, a 13.4% increase.

Funds in every region saw inflows of gold in September.

North American funds led the way, adding 62.1 tons of the yellow metal. Low-cost gold-backed ETFs in the US have charted positive flows for 15 of the past 16 months. These funds have increased their collective holdings by 51% so far this year, according to the WGC.

European-listed funds brought in 7.7 tons of gold last month. The largest inflows were in the United Kingdom, where Brexit concerns continue to drive investors into safe havens. European funds have grown consistently through the year, with positive flows in every month except April. UK-based fund holdings have hit all-time highs, reaching 582 tons or 21% of global gold-backed ETF assets in September

Asian ETFs had another month of solid inflows in September, adding 3.9 tons of gold to their holdings. Asian-listed funds reversed strong early-year outflows of over 12% and have grown 8% on the year to date.

While gold fell in dollar terms last month, it remained near all-time highs in other currencies.

The gold-price rally paused as global rates increased and the US dollar strengthened, falling by 3% (in US dollars) in September after having increased by 20% during the previous four months. Yet global demand for gold-backed ETFs remained strong, especially since gold remained near all-time highs in every major G10 currency, except the US dollar and Swiss franc."

Inflows of gold into ETFs are significant in their effect on the world gold market, pushing overall demand higher. Gold demand was up 8% through the first half of 2019. The World Gold Council listed inflows of metal into gold-backed funds as one of the factors driving 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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