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ETF Holdings of Precious Metals Are Strong and Steady

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Jul. 6 2015, Updated 10:06 a.m. ET

Why should you track 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 a ~28% fall in gold prices in 2013. That’s the equivalent of selling 881 tons of gold. For this reason, investors should track any sustained or significant buying or selling activities by these ETFs.

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ETF gold holdings rise

Though ETF gold holdings have been on a decline for the whole of June, led by the SPDR Gold Trust (GLD), they’ve remained steady. As of June 25, total known gold holdings were 1,598.7 tons, down from 1,599.5 tons as of June 1. After declining to 1,584.9 tons in mid-June, holdings started picking up again.

ETF silver holdings rise handsomely

Total silver holdings increased by nearly 10 million ounces in June. That’s a 1.6% rise to 625.3 million ounces as of June 25. Silver is having the best month since August 2013 as far as ETF inflows are concerned. The iShares Silver Trust (SLV) is the largest silver ETF.

Implications for investors

Since ETFs are large holders of physical gold and silver, any positive developments with them are felt across the market. As a result, when ETFs increase their holdings, it’s usually positive for precious metal prices and stocks including New Gold (NGD), B2Gold (BTG), Hecla Mining (HL), and Silver Wheaton (SLW). It’s also positive 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 at the physical-bullion buying trends in the US market.

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