Commodities & Metals

Gold ETFs Now at All-Time High in Demand for Gold

In a world where headlines are dominated by uncertainty every minute, investors and savers have to consider where the safest place is to keep their money. The current news themes are around impeachment, Brexit, a U.S.-China trade war, slowing global growth, negative interest rates and even all those calls that we are near a recession. It is no wonder that the allure of gold remains so strong.

Gold has been a historic safe-haven asset for centuries. Despite the current price not being at all-time highs, the demand for gold by investors is running off the scales.

The World Gold Council has released data showing that global gold-backed exchange-traded funds (ETFs) have now reached their highest levels of all-time. With a gain of 75.2 tonnes added in September, the new total held by ETFs around the globe was 2,808 tonnes in September.

The World Gold Council noted easy-money monetary policy by global central banks, continued geopolitical uncertainty (including the Brexit deadline and strife in the Middle East) and specified rising turmoil in Congress.

In terms of dollars and cents, the World Gold Council tracked a net inflow of $3.9 billion into ETFs across all regions in September. What matters here is that this gain now puts the total gold holdings back above the record levels seen in 2012, and that was when the price of gold was 18% higher. The World Gold Council also noted that net long positions in COMEX reached all-time highs.

North American and European-listed ETFs accounted for 52% and 44% of global holdings, respectively. The remaining was in funds listed in Asia and elsewhere. North America funds saw 62 tonnes, or $3.1 billion, increases in ETF demand in September, and European-listed ETFs added 7.7 tonnes ($586 million). U.K.-based fund holdings also continued to see all-time highs at 21% of global gold-backed ETF assets in September.

One note on fees jumped out here. The World Gold Council signaled that low-cost gold-backed ETFs in the United States have seen positive flows in 15 of the past 16 months and that they have already seen a 51% jump in their holdings in 2019 alone.

While this is from an outside report, Goldman Sachs recently conducted an investor survey of its clients. They are signaling that bearish sentiment was rather strong at 63% (for equities and the economy), but the firm’s client base also suggested a shift into safer assets. That report said:

Gold continues to be the favored asset class among investors, with 42% expecting the precious metal to end the month above $1,500 a troy ounce, while only 17% are expecting a decline in prices.

Gold was last seen trading down about $5 at $1,493.00 per ounce, after having gone as high as right above $1,550 in August and September. Based on the SPDR Gold Shares (NYSEARCA: GLD), the world’s top gold-backed ETF by far, it was last seen showing a 1% gain to $142.10 on Tuesday morning, in a 52-week range of $111.97 to $146.82. It was up 17.1% in 2019 based on that price.

The site also showed that the latest holdings from the SPDR Gold Shares ETF was at $44.5 billion in assets, and it comes with a 0.40% expense ratio. The newer SPDR Gold MiniShares Trust (NYSEARCA: GLDM) has seen a rise in its assets as well, with a focus on a lower quoted price and lower fees. At $15.04 a share, it had $1.07 billion in assets under management and a 0.18% expense ratio.