Commodity Online
NEW DELHI: And you thought gold exchange traded funds are not popular with investors. Then change that concept at least during the times of recession.
Gold ETFs are cashing in on the rising demand during the recession period from the safe haven hunters.
In a big announcement, world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, revealed this week that it has a record 1,041.53 tonnes of bullion with it till March 12.
This is a record of sorts for the ETF as it has now replaced Switzerland as the world’s sixth-largest holder of gold. SPDR’s stake topped the 1,040.1 tonnes of gold listed as held by Switzerland in December.
According to World Gold Council, Switzerland is ranked as the world’s sixth-biggest official gold holder after the United States, Germany, International Monetary Fund, France and Italy.
According to analysts, most significant factor for the precious market this year is that long-term, stable funds have been entering the ETF in a systemic way.
And they have become big hits among the investors. Investments in SPDR have played a large part in pulling the spot market higher with its holdings pausing from repeatedly hitting new highs when spot gold fell back after rising to an 11-month high above $1,000 on February 20.
SPDR holdings dipped for the first time in two months in March, preceding a fall in spot gold below $900 an ounce, underscoring a close correlation between the fund’s holdings and the market.
Gold prices have moved up and down on differing cues from stocks and currencies, but bullion’s safety appeal remains intact due to the grim outlook for the global economy and more countries possibly selling their own currencies as a way to fight deflation.
The plus point with gold ETFs now is that gold remains the most stable of the assets, and the ETFs offer the easiest access to gold investment. From an investor point of view, gold is currently the most attractive product.
Compared with a generally steady rise in gold prices, oil prices have undergone sharper swings in prices, a reflection of the difference in types of investors putting money in the market.
