Total gold holdings in ETFs grew marginally in March, resuming an upward trend that started last fall. Total holdings of the yellow metal globally rose 3 tons, with increases seen in every region, according to the most recent data released by the World Gold Council.
ETFs worldwide currently hold 2,483 tons of gold valued at approximately $103 billion.
North American funds took in the most gold last month, increasing holdings by 2.5 tons. Early in the month, about $2.5 billion in gold flowed out of North American funds, but that reversed later in the month, coinciding with a rally in the price that was linked to the Federal Reserve’s continued dovishness during the March FOMC meeting.
The World Gold Council said it believes economic and market dynamics will continue to support gold investment in North America this year.
“Looking forward, we believe that financial market uncertainty, as well as the shift in monetary policy and possibly a range-bound US dollar will support investments in gold.”
Holdings in European funds were up slightly by 0.3 tons. Holdings in UK-based gold-backed ETFs remain near all-time highs, likely driven by the uncertainty surrounding Brexit
Inflows into funds based in Asia were also up modestly by 0.3 tons.
Globally, ETF gold holdings have increased in five of the last six months. So far in 2019, we’ve seen collective inflows of 42 tons of gold, valued at $1.9 billion. That’s a 1.9% increase driven primarily by strong inflows in January. Total holdings remain near levels last seen in early 2013 when the price of gold was 25% higher.
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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