Tracking ETF holdings
According to World Gold Council data, ETFs accounted for close to 9.2% of all the gold investment demand in 1Q15. Outflows from ETFs led to an ~28% fall in gold prices in 2013. That’s the equivalent of selling a combined 881 tons of gold. For this reason, investors should track any sustained or significant buying or selling activities by these ETFs.
ETF holdings were steady last week
In our last update on ETF holdings, we reported that the SPDR Gold Trust’s (GLD) gold holdings stood at 714.2 tons as of May 20—the lowest level since mid-January. The total known gold holdings were 1,603.1 tons as of May 20. Since then, gold holdings have been more or less steady. As of May 27, the known gold holdings were 1,603.2 tons.
Although gold holdings were steady during last week, they’re still at the lowest level in the last four months after liquidation by GLD. Gold ETF holdings reached a peak of 1,679.8 tons on February 24, 2015. In January and early February, gold holdings surged because of the Swiss National Bank’s decision to remove the euro cap. Also, the ECB (European Central Bank) introduced easing measures amid slow growth and uncertainty over the upcoming Greek elections. This move encouraged gold holdings.
Silver ETF holdings were also steady in the past week. The holdings were 615.8 million ounces on May 27—compared to 616.5 million ounces on May 20. The iShares Silver Trust ETF (SLV) is the largest silver ETF.
Implications for investors
Since ETFs are large holders of physical gold and silver, any negative sentiment is felt across the market. As a result, when ETFs sell off it’s negative for precious metal prices and stocks like Sibanye Gold (SBGL), B2Gold (BTG), Hecla Mining (HL), and Silver Wheaton (SLW). It’s also negative for the VanEck Vectors Gold Miners ETF (GDX). Silver Wheaton accounts for 4.8% of GDX’s holdings.
In the next part of this series, we’ll look the physical bullion buying trends in the US market.