On Thursday gold lifted from the 2018 low the metal struck yesterday, exchanging hands for $1,320.40 near the close of trading.
Despite recent weakness gold is still up by $75 an ounce since mid-December after large-scale speculators increased their exposure to gold on derivatives markets for the seventh week in a row. Hedge funds have more than doubled net long positions – bets that gold will be more expensive in future – to the equivalent of 21.4m ounces.
As of 31 January 2018. Source: Bloomberg; Company Filings; ICE Benchmark Administration; World Gold Council
Retail and institutional investment in gold-backed exchange traded funds (ETFs) also continues to grow. New data from the World Gold Council shows ETF vaults now hold around 2,396 tonnes or 77m troy ounces after net inflows in January of 27.6 tonnes, growing total global assets under management by 5%.
2016 was the best year for funds in eight years with global net purchases of more than 500 tonnes, primarily thanks to European bullion investors. In dollar terms 2016 was the most successful year for the industry which first emerged in Australia in 2003.
So far this year North American gold investors have the led the charge with funds adding 21.5 tonnes worth $940m during the month or three-quarters of the global total. European funds, added 7.6 tonnes, while Asian funds had net redemptions equal to 1.4 tonnes during the month.
The most successful fund in terms of inflows in January was iShares Gold Trust which added 17.8 tonnes worth $767m swelling its vaults 7.6% to 261 tonnes, closing the gap with 800-pound gorilla SPDR Gold Shares which only grew assets 0.5% during the month. New York-based GLD holds 841 tonnes of gold.
In 2011 when gold was hitting record highs above $1,900 an ounce GLD became the largest ETF in the world briefly surpassing the venerable SPDR S&P 500 trust. Total global gold bullion holdings hit a record 2,632 tonnes or 93 million ounces in December 2012.
As of 31 January 2018. Source: Bloomberg; Company Filings; ICE Benchmark Administration; World Gold Council
2 Comments
therooster57
Capital flowing into any gold ETF is useless to the economy. It’s not a currency model like goldmoney.com
The utility value of gold is greatest in the currency application where it supports real world transactions and allows for systemic debt to be SAFELY purged.
Gold as an investment is a static hoard, no better than a sacred calf that sits in the desert of economic depravity.
Brett
I don’t trust GLD at all. They are not at all straightforward about GLD’s insurance in the slightest. Their representatives will not confirm nor deny the existence of GLD’s insurance. I recommend anyone curious about this to confirm via calling GLD’s publicly listed number for general inquiries at 866 320 4053 and ask about this clause from the GLD prospectus: “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” Exactly how much of the fund is insured? They will not give you a straight answer and might even throw in some bizarre excuse which I’ve experienced. Why hide this information from investors? The people behind GLD certainly do not seem like the most honest types.