While the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and other gold-related exchange traded products, some critics have questioned the veracity of demand for the yellow metal.
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The good news for gold bugs is the bullion demand has been solid this year and on a related note, there are some large, steady buyers throughout the world. Demand for gold assets have surged this year. For instance, ETF flows into gold have expanded at their fastest pace since 2009. Physically backed gold ETF holdings are still one-third below the December 2012 peak, which suggest that prices can hold at about $1,200 per ounce.
Related: Demand Supports Gold ETFs
Global central banks, some of which are seen as key supporters of gold’s upside, remain buyers of the yellow metal. Actually, central banks have been diligently buying gold since the global financial crisis in 2008.
“In fact, says a new report from the OMFIF (Official Monetary and Financial Institutions Forum) research group, central banks have been buying gold at a rate of 350 metric tonnes a year (385 standard tons) for the last eight years. That takes us back to the sorts of levels we saw in the pre-1970 era,” according to ETF Daily News.
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Investors interested in the gold asset have a number of options available, such as the Van Eck Merk Gold Trust (NYSEArca: OUNZ). However, OUNZ is structured a little differently than its competitors.
OUNZ seeks to provide investors with a convenient and cost-efficient way to buy and hold gold through an ETF while also providing investors the option, if they desire, to take physical delivery of the metal. OUNZ is the only ETF that provides its patented, physical gold delivery option.
Each share of OUNZ is like holding a fractional share of physical gold, so investors are able to exchange shares for gold bullion whenever they desire. One share of OUNZ is the equivalent of 0.0099 ounces of gold, according to Merk Gold.
Since 2008, central banks have “added more than 2,800 tonnes to reserves – nearly 10% of the global total. China and Russia are the main buyers, but developed world central banks have been adding too, or at least keeping reserves static,” reports ETF Daily News.
For more information on the Gold ETFs, visit our Gold category.
SPDR Gold Shares
Tom Lydon’s clients own shares of GLD.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
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