Gold-Backed ETFs Have Never Seen a Run of Inflows Like This
Comment of the Day

February 26 2020

Commentary by Eoin Treacy

Gold-Backed ETFs Have Never Seen a Run of Inflows Like This

This article by Ranjeetha Pakiam for Bloomberg may be of interest to subscribers. Here is a section:

Global investors are stashing more and more assets into gold as the coronavirus outbreak spreads and appetite for risk takes a hit.

The global tally of bullion in exchange-traded funds swelled by the most in more than a month on Tuesday as equities sank. That was the 25th consecutive day of inflows, a record. At 2,624.7 tons, the holdings are the largest ever.

After surging 18% last year, gold has extended its rally in 2020, with prices hitting the highest since 2013. The haven has been favored as the virus outbreak has spread beyond China, threatening a pandemic and slower growth.

Goldman Sachs Group Inc. has said that should the disruption from the disease stretch into the second quarter, prices may rally toward $1,850 an ounce. Spot bullion was last at $1,644.67, up 0.6%. It touched $1,689.31 on Monday.

A global recession is likely if the coronavirus becomes a pandemic, according to Moody’s Analytics Chief Economist Mark Zandi. The odds of that outcome now stand at 40%, up from 20%, he said in a note.

The threat of a prolonged downturn in growth due to the impact of the virus may keep gold elevated, according to Morgan Stanley. Further ETF inflows are likely as long as real interest rates remain negative, it said in a note.

Eoin Treacy's view

The Total Known Holdings of Gold in ETFs hit a new all-time high yesterday. The most significant point about the advent of ETFs as a major holder of bullion is even during the bear market for gold, ETFs still held 45 million ounces. Today it’s almost 85 million ounces.

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