Humans have been hoarding shiny flecks of gold for ages, but investors are beginning to shift from physically stashing away gold under their mattress to gold-related exchange traded funds.
U.S. Mint’s gold-coin sales have fallen to 753,000 an ounce, or 25% lower from 2011, reports Myra P. Saefong for MarketWatch. It was the third straight year of declines.
In contrast, golds in global gold exchange traded products rose about 44% over the past three years as investors sought an easy way to hedge against inflation, the falling dollar or even a breakdown in the financial system. [Gold ETFs Could Strengthen Ahead of Chinese New Year]
The demand for gold futures has also lifted gold prices to their 12th consecutive annual gain. Gold currently sits at about $1,680 an ounce. Consequently, some observers believe that the higher cost of gold has constrained physical gold coin hoarders. It was much easier to buy gold coins when gold was a couple of hundred bucks.
On the other hand, investors can now choose among a variety of physically-backed gold ETFs, including SPDR Gold Shares (NYSEArca: GLD), iShares COMEX Gold Trust (NYSEArca: IAU), ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and ETFS Physical Asian Gold Shares (NYSEArca: AGOL).
“The ETFs are appealing because they are an investment product as opposed to a physical product,” Nolan Watson, president and chief executive officer of Sandstorm Gold Ltd., said in the article. “If you buy ETF shares, you don’t have to hide them under your mattress or bury them in your back yard.”
“There is continuing strong demand for gold ETFs as investors seek to protect their wealth against erosion caused by [quantitative easing]and currency debasement,” Marcus Grubb, managing director of investment for the World Gold Council, said in the article.
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Max Chen contributed to the article.
Full disclosure: Tom Lydon’s clients own GLD.