ETF Inflows Are a Key Mover for Gold, Silver Prices

The Federal Reserve’s decision to keep money cheap for the next few years gave a nice assist to gold and silver prices, but the precious metals have been getting an additional push from exchange-traded funds (ETFs).

“Record pace of ETF investor inflows, weakening US Dollar and negative real yields are the primary drivers for [gold’s 2020] push higher,” says a note from analysts at US financial giant Citigroup, who raised their 3-month price target to $2,200, according to a BullionVault article.

Per the article, silver also reached a 7-year high last week.

“Silver ETFs tend to be more retail investor-oriented than professional,” says head of market analysis Rhona O’Connell at brokerage StoneX, “and retail holders tend to hang on to their metal for long periods.”

“So on balance” – and checking positioning data in Comex derivatives, where money managers have cut their bullish bets without raising their bearish bets as a group – “[this]does suggest some profit-taking on behalf of the professionals.”

Investors looking to get gold exposure can look at funds like SPDR Gold Shares (NYSEArca: GLD)and the SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.

Gold Price in US Dollars Chart

Gold Price in US Dollars data by YCharts

Another fund to look out for is the VanEck Merk Gold Trust (OUNZ). OUNZ seeks to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold in exchange for those shares. The Trust’s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust’s operations.

ETF investors looking to get in on the silver action can look to funds like the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver:

  • SLV seeks to reflect generally the performance of the price of silver. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. It is not actively managed. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of silver.
  • SIVR seeks to replicate, net of expenses, the price of silver bullion. The shares are backed by physically allocated silver bullion held by the custodian. All physical silver held conforms to the London Bullion Market Association’s rules for good delivery.

Silver Price Chart

Silver Price data by YCharts

For those looking for leverage, they can look to ETFs like the VelocityShares 3x Long Silver ETN Linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV)  and the ProShares Ultra Silver (NYSEArca: AGQ).

For more market trends, visit ETF Trends.