The capital into gold exchange-traded funds (ETFs) is flowing and still going, according to a Kitco News article. Strong flows into gold ETFs are helping to offset weaker demand in China and India.
According to the article, “data from Hong Kong’s Census and Statistics Department on Monday showed that China exported more gold to Hong Kong (14.5 metric tons) last month than it imported from there (4.2 tons). Thus, Chinese gold imports from Hong Kong were negative for the first time since records began in 2007.”
“Normally, Hong Kong serves as the leading import hub for gold to China because Chinese gold demand significantly exceeds domestic supply,” said Commerzbank analyst Cartsen Fritsch in a research note. “However, Chinese households have been buying virtually no gold because of the corona crisis and record-high local prices.”
China’s imports during the first four months of 2020 are down 89% Frtisch noted, while gold demand in India isn’t any better.
“This underlines just how much gold demand and the gold price depend at present on demand for gold ETFs, which has remained extremely robust recently,” Fritsch said. “This month alone, more than 120 tons of gold has flowed into the gold ETFs tracked by Bloomberg. This is significantly more than is normally imported by China and India combined.”
Using ETFs for Gold Exposure
Investors who want to shore up their retirement accounts with gold exposure can look at funds like the popular SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM). In addition to GLD and GLDM, here are a pair of other gold funds to look at:
- iShares Gold Trust (IAU): seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. 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 gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
- Aberdeen Standard Gold ETF Trust (SGOL): seeks to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
Leveraged funds aren’t an ideal tool for retirees to utilize, but for short-term traders looking for leverage can use funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), VanEck Vectors Gold Miners (NYSEArca: GDX) and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).
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