Global ETF gold holdings increased in November for the first time since this summer.
Gold-backed ETFs saw net inflows of 13.6 tons last month. Total holdings rebounded from year-to-date lows to 3,578 tons. According to the World Gold Council, investment demand for larger gold ETFs returned with decades-high inflation and heightened market volatility.
Gold ETFs reversed course with inflows into large North American and European ETFs despite only a small increase in gold prices. It was the first net increase in ETF gold holding since July.
Inflows of gold into North American funds led the way recording a 12.1-ton increase in holdings.
European funds added 5.6 tons of gold, led by large funds in France and the United Kingdom.
Both the US and the eurozone face inflationary pressures. In the US, the October CPI reached the highest level since 1990. Eurozone inflation hit a record high.
Asian funds experienced net outflows of 5.0 tons of gold. This was primarily driven by tactical selling in China as the local gold price rose and equity markets stabilized. Holdings began to recover later in the month as gold prices fell. Inflows into Indian funds help offset selling by Chinese funds.
Funds in other regions, including Australia, added about 1-ton of gold.
Inflows of gold into ETFs are significant in their effect on the world gold market, pushing overall demand higher.
There’s a difference between investing in gold-backed ETFs and physical gold. Learn more here.
ETFs are backed by physical gold held by the issuer and are traded on the market like stocks. They allow investors to play gold without having to buy full ounces of gold at spot price. Since their purchase is just a number in a computer, they can trade their investment into another stock or cash pretty much whenever they want, even multiple times on the same day. Many speculative investors appreciate this liquidity.
There are good reasons to invest in ETFs, but they aren’t a substitute for owning physical metal. In an overall investment strategy, SchiffGold recommends buying gold bullion first.
When considering gold-backed ETFs, you should always keep in mind that you don’t actually own the gold. Buying the most common ETFs does not entitle you to any actual amount of the precious metal.
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