“Changes in the aggregate gold holdings of ETFs have been a fairly consistent leading indicator of future gold prices over the past few years. Globally, gold ETFs purchased nearly 250 tons (about 800 million ounces) so far this year – and the total quantity of ETF gold held on behalf of investors now amounts to more than 2,600 tons,” Nichols writes.
“It may well be that money flowing into gold ETFs is a consequence of the very accommodative monetary policies now being pursued by the Federal Reserve and many other major central banks across Europe and Asia – with rapid central-bank money growth a causative factor explaining both strong demand for ETF gold and the long-term upward trend in the metal’s price,” he adds.
Since gold ETF assets tend to be “sticky,” their buying patterns are seen as a better gauge of long-term sentiment rather than short-term price fluctuations. [Measuring the Impact of Gold ETFs]
The largest gold ETFs include iShares Gold Trust (NYSEArca: IAU), SPDR Gold Shares (NYSEArca: GLD) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL). [How to Use Gold ETFs]
ETFS Physical Swiss Gold Shares
Full disclosure: Tom Lydon’s clients own GLD.