Monitoring ETF holdings
Outflows from ETFs led to a ~28% fall in gold prices in 2013. That’s the equivalent of selling a combined 881 tons of gold. As a result, it’s important for gold investors to monitor changes in ETF holdings.
ETFs hold substantial amounts of physical gold and silver. It’s important for investors to track any sustained or significant buying or selling activity by these ETFs.
ETF holdings surge
There are 14 known gold ETF holdings. These include the SPDR Gold Trust (GLD), the largest physical-gold-backed ETF. Global ETFs backed by physical gold saw inflows of 20 tons in one week ending February 5. Gold holdings in February 5 were 1,676.9 tons. On January 14, holdings touched 1,595.6 tons. This is the lowest value since April 2009.
The recent European Central Bank quantitative easing move, as well as loose monetary policies by other central banks, have propelled investors toward safe-haven assets such as gold.
Impact on precious metals
An increase in precious metal ETF holdings boosts investor confidence in precious metals. This supports the price of precious metals, which is positive for stocks such as Goldcorp (GG), Barrick Gold (ABX), Newmont Mining (NEM), Kinross Gold (KGC), Yamana Gold (AUY), and Silver Wheaton (SLW). It’s also positive for the VanEck Vectors Gold Miners ETF (GDX). SLW makes up 4.7% of GDX’s holdings.