Examining March Gold ETF Flows

MarketsETF Trends

This article was originally published on ETFTrends.com.

Gold and related gold ETFs were golden in the first quarter of 2018 relative to other assets. The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and other gold ETFs notched positive first-quarter performances while the S&P 500 finished lower by 1%.

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Increased equity market volatility and a still sagging U.S. dollar were among the catalysts sending investors to bullion and the related exchange traded products.

“Global gold-backed ETFs collectively added 22.5 tonnes (t) of gold during March, increasing their holdings to 2,415 t (US$102.8bn),” according to recent data from the World Gold Council.

GLD is the largest physically backed gold ETF on the market, providing investors exposure to gold price movement in an easy-to-use investment vehicle. The ETF is backed by physical gold bars stored in London vaults. The gold trust currently holds about 27.2 million ounces of gold, so each SDPR Gold Shares represents fractional ownership of the underlying gold.

Gold Fighting Off The Fed

Gold’s recent bullishness is impressive when considering that the Federal Reserve raised interest rates earlier this month, setting the stage for two more rate hikes later this year. However, the yellow metal has been boosted by the dollar’s disappointing showing this year.

“North American funds have accounted for 85% of total net inflows on the year, driven by iShares Gold Trust (27.9t, US$1.2bn, 12% AUM), and SPDR® Gold Shares (8.6t, US$396mn, 1.1% AUM),” according to the WGC. “Europe has lost its 2017 asset-gaining momentum having slight outflows of 1.2t (US$171mn), highlighted by Gold Bullion Securities which has lost 10.6t (US$467mn, 12% AUM) on the year.”

Some traders are taking advantage of higher gold prices with gold miners ETFs, including the VanEck Vectors Gold Miners ETF (NYSEArca: GDX), the largest exchange traded fund dedicated to gold mining stocks.

GDX is comprised of global gold miners, with a notable tilt toward Canadian and U.S. mining companies. Stock fundamentals like cost deflation across the mining industry, share valuations below long-term average and rising M&A are all supportive of the miners space as well, but those fundamentals could be glossed over if the dollar strengthens.

Related: 10 Gold ETFs: Is it Time to Go for Gold?

GLD and IAU “were the primary drivers of North American and global inflows, accumulating 15.1t (US$642mn, 1.8% AUM), and 5.4t (US$230mn, 2% AUM), respectively, during March,” said the WGC.

For more information on the gold market, visit our gold category.

Tom Lydon’s clients own shares of GLD.

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