Gold-backed ETF at largest monthly increase
Holdings in global gold-backed ETFs and similar products rose sharply in June by 127 tonnes (t) to 2,548t – equivalent to US$5.5bn in inflows – as geopolitical uncertainty increased and central banks signalled a shift to a more accommodative policy over the coming months. This drove rates and the US dollar lower and shifted the momentum in gold as its price moved to a six-year high.
Global Assets Under Management (AUM) in US dollars rose 15% to US$115bn, the largest monthly increase since 2012, as all regions experienced inflows. More than half the AUM growth came from the 9% gold price rally in US dollars.
Gold is one of the strongest performing asset classes in 2019, and reached all-time highs in a handful of currencies, most notably the Australian dollar, particularly relevant as Australia ranks second globally amongst countries in gold mining production.
North American funds added 65t (US$2.9bn, 5% of AUM), driven in part by momentum investors who utilised the most liquid funds to gain investment exposure. Additionally, low-cost gold-backed ETF assets rose to all-time highs of 53t (US$2.4bn), representing 85% growth over the past year. We believe the strong asset growth in not only larger, more liquid funds, but also low-cost funds, highlights increased holdings by both tactical and strategic investors.
European funds brought in 59t (US$2.5bn, 4.7%), as UK-based funds represented three out of the top five funds globally in terms of inflows. The continued uncertainty surrounding UK leadership and Brexit continued to drive gold investment demand, with UK-based holdings at all-time highs.
Gold prices broke out above the five-year resistance level of US$1,365, as momentum and sentiment shifted. After spending much of last year at historically low levels, COMEX net longs increased to 868t at the end of the June, the highest level in nearly three years†. Gold trading volumes increased to US$165bn per day in June, 45% higher than the 2018 average, driven by volume in the over-the-counter (OTC) markets, which rose 50% m-o-m. Gold options put/call skew continued to move to extreme levels, as investors paid a much higher premium to buy calls versus puts.
Global gold-backed ETF holdings and flows:
Gold-backed ETFs and similar products account for a significant part of the gold market, with institutional and individual investors using them to implement many of their investment strategies. Flows in ETFs often highlight short-term and long-term opinions and desires to holding gold. The data on this page tracks gold held in physical form by open-ended ETFs and other products such as close-end funds, and mutual funds. Most funds included in this list are fully backed by physical gold.
Regional flows shows UK-based gold-backed ETFs represent 60% of global inflows in 2019, North American funds had inflows of 65t (US$2.9bn, 5.0% AUM), Holdings in European funds rose by 59t (US$2.5bn, 4.7%), Funds listed in Asia increased by 2.4t (US$107mn, 3.3%) and other regions had inflows of 0.4t (US$16mn, 1.2%).
Individual flows:
ETFS Physical Swiss Gold added US$1bn in June growing 115% over the month. In North America, SPDR® Gold Shares added 51t (US$2.2bn, 7.2%), and experienced its largest, one-day inflows of all time on 21 June, while iShares Gold Trust added 12t (US$537mn, 4.6%) and low-cost gold-backed ETFs added $72mn or 3% of assets. (Low-cost US-based gold backed ETFs are defined as gold-backed ETFs that trade on US markets with annual management fees of 20bps or less.)
In the UK, ETFS Physical Swiss Gold added 23t or nearly US$1bn and grew by 115% during the month. iShares Physical Gold ETC added 20t (US$900mn, 21%) and Invesco Physical Gold added 5.7t (US$, 240mn, 4.2%) and in China, Bosera’s listed fund added US$45mn or 13% of its assets last month, and Huaan Yifu added $43mn, but leads global outflows on the year losing US$348mn or 32% of its assets.
