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Gold ETF Holdings Remain Weak Even amid Financial Turmoil

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Tracking ETF holdings is important

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 decline

In our last update on ETF holdings, we reported that total known ETF gold holdings stood at 1,598.7 tons as of June 25. Since then, gold holdings have further declined. As of July 10, known gold holdings were 1,585.3 tons. Despite the unfolding of the Greek (GREK) crisis and Chinese (MCHI) equity market fall, the gold ETF holdings have not picked up as expected.

As previously discussed, investors are buying into other safe-haven assets, including the US dollar and sovereign debt.

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.

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