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Demand for Gold ETFs Jumps

August 05, 2019,


Trade wars have been dominating market action in recent days as the dispute between the U.S. and China escalates. ETF investors, in turn, have been flocking to safe havens such as gold funds.Gold ETFs have been rallying sharply as demand picks up pace. Prices for the yellow metal are trading at six-year highs around $1,450/oz., and assets have been flowing into the biggest gold ETFs.The SPDR Gold Trust (GLD) has attracted $1.7 billion in net inflows as it has rallied 12.5% so far this year. GLD is the biggest physical gold ETF, with $38 billion in total assets. The fund has been so popular that it landed among the 10 biggest ETF creations in July, taking in a net of $1.3 billion in fresh money.Like GLD, the iShares Gold Trust (IAU), too, has taken in $1.3 billion, while the SPDR Gold MiniShares Trust (GLDM) and the GraniteShares Gold Trust (BAR) have gathered a combined $600 million.


Of note is the fact that gold—which offers no yield—is looking attractive to investors faced with bond yields dropping globally, which are currently at or near record lows. As’s Sumit Roy put it, “Bloomberg estimates that $14 trillion of debt in the world is yielding less than zero, or nearly 26% of the market. It’s a bizarre situation, and makes gold look much more appealing by comparison. When investors literally have to pay to lend money, gold’s ‘zero yield’ is downright attractive.”Demand for gold is a big driver of overall demand for commodity ETFs, which took in nearly $2 billion in aggregate last month.