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LAWRIE WILLIAMS: Gold ETFs take in spectacular volumes past two days

Heavy sales out of the main gold ETFs – SPDR Gold Shares (GLD) in particular – were seen as one of the principal reasons for the dramatic falls in the gold price in 2012 and 2013 in particular, so why, one might ask, has the gold price not benefited more than it has from a remarkable two working day upsurge in the main ETF gold holdings?  Indeed this year’s increase in GLD’s gold holdings has been rather more than solid – and absolutely spectacular on Friday last week and Monday this when a total of just under 39 tonnes were added – this is equivalent to around 4 .5 days total annual new mined gold production into just one ETF.  Over the year to date GLD’s gold holdings have increased by 110 tonnes to the current level of 752.3 tonnes.  This is equivalent to more than the annual gold output of the world’s 10thlargest gold producing nation – Ghana. The much smaller iShares Gold Trust (IAU) added a further 7 tonnes over the same two days - See: More huge gold purchases into US gold ETFs – almost 46 tonnes in 2 days

Indeed by yesterday the global gold ETFs tracked by Bloomberg had increased their holdings by some 203.7 tonnes to the highest level in almost a year (that is equivalent to close to the annual output of the world’s fourth largest producer of new mined gold – the USA).  But the gold price, which one would have thought would be soaring on this kind of news, has been rather more circumspect in its performance and at the time of writing is at around $1,220 – still around $40 short of the brief recent peak it reached almost two weeks ago.

Germany’s Commerzbank comments that since the beginning of February alone, more gold has flowed into the ETFs than was withdrawn in the whole of last year. Thus so far this year inputs bring total ETF holdings tracked by Bloomberg at 1,665 tons, their highest level in nearly a year. ETF investors, who are generally regarded as having a longer term horizon, reckons Commerzbank, clearly view the current price level as an attractive opportunity to buy and that the high ETF purchases should lend further support to the gold price.

23 Feb 2016 | Categories: Gold

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