Gold Rush is On in ETFs

October 11th at 8:52am by John Spence

Investors are flooding into gold ETFs following the latest easing measures from the Federal Reserve and other central banks. Investors are using the precious metal funds to protect themselves from currency debasement and the next potential outbreak in Europe’s debt crisis.

The largest precious metal ETF, SPDR Gold Shares (NYSEArca: GLD), has raked in $3 billion since the end of August.

About 191 metric tons of gold have flowed into related ETFs since the end of July, and buying in gold exchange traded products totaled nearly $8 billion in the third quarter, the highest quarterly inflow in over two years, MarketWatch reports.

Currently, assets under management at gold ETPs stand at an all-time high of $151 billion, according to the story.

Commerzbank said the surge in ETF assets reflects “ultra-loose monetary policy” coming from central banks that is “fueling fears of reduced purchasing power as a result of inflation and currency devaluation.”

GLD, the gold ETF, is up 12.3% the past three months.

Along with more liquidity, “there’s less confidence in equity markets as we go into the end of the year, and there’s still no resolution in Europe as far as their financial crisis,” ETFtrends.com Editor Tom Lydon told MarketWatch.

“Gold historically has been a protector of assets, so it’s a way for advisors and investors to hedge portfolios,” he said. “You continue to see more of an appetite” for exposure to gold, Lydon said.

Other ETFs tracking gold include iShares Gold Trust (NYSEArca: IAU) and ETFS Swiss Gold Shares (NYSEArca: SGOL).

SPDR Gold Shares

Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, 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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