Gold ETFs Gain Inflows Despite Price Weakness

December 5th at 7:43am by Tom Lydon

Gold prices have gained more than 9% this year and exchange traded fund investors remain bullish on the precious metal despite the recent price slumps. Gold ETFs remain one of the most popular and convenient ways to gain exposure to this commodity.

The precious metal’s price has been hovering around the key $1,700-an-ounce level.

“For those investors who think gold’s secular trend died last year–we say look again,” John LaForge of Ned Davis Research commodities said. After more than a decade of advances, gold “has gone nowhere in the past 11 months,” he added.

The largest gold-backed ETF, SPDR Gold Shares (NYSEArca: GLD) lost 1% recently as talks in Washington regarding the fiscal cliff have gone nowhere and the European debt crisis is still waiting on Greece. There was about $8 billion that flowed into the most popular gold ETFs in 2012, reports Brendan Conway for Forbes. GLD, ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and the iShares Gold Trust (NYSEArca: IAU) account for the lion’s share of gold parked in physically-backed ETFs. As of last week, $1.6 billion in new inflows was added to GLD alone.

Murray Coleman for Dow Jones Newswires reports that precious metals ETF traders did more buying than selling this year. Inflows into the 14 U.S. listed precious-metal ETFs rose by more than $282 million in the week through Thursday, according to market tracker XTF Global. [Will Gold Miner Stock ETFs Slip Over the Fiscal Cliff?]

“It makes sense with all of the uncertainty in the market right now to stay focused on the longer-term fundamentals of precious metals–particularly gold,”Jerry Slusiewicz, president of Pacific Financial Planners said. [Gold ETFs and Inflation]

Analysts say another catalyst for gold are emerging markets central banks. For instance, China is ramping up efforts to allow physically-backed ETFs to trade on local exchanges, and diversify central bank holdings. [China Eyes Gold ETFs]

SPDR Gold Shares

 

Tisha Guerrero contributed to this article.

Full disclosure: Tom Lydon’s clients own 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.