Capital Flows Headed in Wrong Direction for Gold ETFs
August 7, 2018 by Paul AusickAUM fell by 4% in July to $94 billion, helped along by a 2% decline in gold prices. North American outflows totaled $984 million, nearly two-thirds of the global outflow of $1.53 billion in the month.
For the first seven months of 2018, North American AUM have dropped 2.4%, while European funds have added 5.3% and Asian funds have added 8.2%. Combined, however, the non-North American funds hold a total value of $45.9 billion, compared with North America’s $48 billion in AUM.
In July, the U.K.-based iShares Physical Gold ETC saw an inflow of $725.5 million in AUM. The U.S.-based SPDR Gold Minishares Trust (NYSEARCA: GLDM) experienced the second-largest dollar inflow, $62.2 million, a jump of 226%.
The SPDR Gold Shares ETF (NYSEARCA: GLD) leaked $752.2 million (a loss of 2.3%) and has lost $1.42 billion (down 4.1%) since the beginning of the year. On a percentage basis, July’s biggest loser was China’s Bosera Gold Exchange Trade Open-End Fund ETF, down 18% ($223 million). The Bosera fund is down 234% in the first seven months of 2018 with total outflows of $706.4 million.
In its outlook for the second half of the year, published last month, the World Gold Council identified three key macroeconomic trends that will influence investors’ attitudes about gold:
- Positive, but uneven global economic growth
- Trade wars and their impact on currency
- Rising inflation and an inverted yield curve
The council sees reasons for optimism in markets like jewelry, technology and long-term savings. Investment demand often rises when equities markets decline and gold competes well with other investments on the basis of opportunity cost. These reasons are supported by a relatively low gold price that could spur investment in the yellow metal.
The SPDR Gold Shares ETF traded at $114.68 in the early afternoon Tuesday, up 0.3%, in a 52-week range of $114.31 to $129.51.
The SPDR Gold Minishares Trust traded up about 0.3%, at $12.11 in a 52-week range of 12.09 to $12.64.
Gold for December delivery (the most active contract) traded at $1,219.20 on the NYMEX this afternoon. The 52-week range is $1,212.50 to $1,392.30.