North American Gold ETF Buying Jumped From $71 Million to $7.7 Billion in One Month. Can GLDM Hold Up?
Gold ETF inflows across North America surged to levels that shocked even veteran commodity watchers, but a simultaneous spike in real yields now puts the entire trade on trial. Whether August's buying spree becomes a historic floor or a textbook…
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North American physically backed gold ETFs went from a sleepy $71 million of net buying in July to $7.7 billion in August, a roughly 108-fold jump that landed just weeks before the Federal Reserve’s September policy move. For SPDR Gold MiniShares Trust (NYSEARCA:GLDM), the low-cost cousin of GLD, that flood raises a specific question: is this durable diversification demand or a momentum wave that reverses as real yields climb?
GLDM charges 0.10% and holds physical bullion. The World Gold Council’s August tally covers the entire North American category, and collective global holdings hit a record 4,189 metric tons on $18 billion of inflows that month.
The Fed lifted its policy rate by 0.25 percentage point on September 16; spot gold slid 1.2% to $4,240.10 an ounce, and GLDM closed near $85. The setup is a real-time stress test for the fund’s core pitch.
Reading the Flow Surge Correctly
The $7.7 billion figure captures every North American physically backed gold ETF, so GLD, IAU, IAUM, SGOL and GLDM all share that pool.
Rising fund assets can diverge from net share creations. Gold’s price peaked near $4,683 on August 25, so some AUM gains reflect a markup on existing shares rather than new money.
A 108-fold monthly jump in net buying is a genuine behavioral shift. It lines up with a VIX that climbed 20.7% over the month and a Core PCE index at 130.66, the highest reading in the trailing year.
Does GLDM Deliver on Its Promise?
GLDM’s job is simple: cheap, physically backed exposure to spot gold. The fund returned 16% over one year, 143% over five years, and 236% over ten years. Those numbers roughly mirror the underlying metal, which is exactly what a 0.10% expense ratio should deliver.
Recent performance is less flattering. GLDM is down 3% over the past month and 3% over the past week, with a 1% drop on the day of the Fed decision.
The 10-year Treasury yield sits at 5.00%, its highest reading in the trailing year and in the 99.6th percentile of that window. The 10-year real yield climbed from 2.42% on September 3 to 2.68% on September 16.
Positive and rising real yields are a headwind for gold because they raise the opportunity cost of holding an asset that pays nothing. The Fed’s target range upper bound is 3.75% after the September move.
Gold’s response has been orderly rather than a rout, suggesting the August buying reflected more than a tactical bet on imminent rate cuts. The measured drawdown against a backdrop of multi-month highs in real yields points to structural demand rather than pure momentum chasing.
The Bull and Bear Case for GLDM
The bull case rests on durability. If the surge reflects fiscal anxiety, central bank buying and portfolio insurance rather than tactical rate speculation, GLDM’s 0.10% fee and physical backing make it the most efficient way to own the thesis. Record global holdings of 4,189 metric tons suggest the shift is broad.
The bear case is opportunity cost. With the 10-year at 5.00% and real yields at multi-month highs, cash and Treasuries pay you to wait, while gold fell from around $4,683 on August 25 to $4,282 on September 16.
The deciding variable is real yields. If they roll over as inflation stays sticky, GLDM works as a portfolio hedge; if they grind higher, the August flow surge will look like a top, not a floor.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
