ETF Outflows, a New Crisis in Europe, and the Gold Market

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Published : February 27th, 2013
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[Some thoughts on recent developments that have clearly had a positive impact on the gold market.]

A number of stories in the financial media in recent days argue that two developments are having an impact on precious metals prices – outflows from the world’s gold ETFs and a new crisis in Europe.

Given that the gold price has been rising sharply so far this week, it seems clear that only one of these developments is really affecting the gold price, however, that hasn’t stopped a well-known investment bank from predicting doom and gloom for precious metals investors.

24hGold - ETF Outflows, a New ...To be sure, gold as an investment in the U.S. has lost some of its appeal in recent months. This is due to a number of factors, one of the most important being the failure of the price to continue rising after the Federal Reserve launched new money printing efforts late last year.

Relative calm in Europe over the last six months has also dented demand for the metal as a safe haven, however, that situation appears to be changing rather dramatically since an election in Italy over the weekend.

We’ll get to that in a minute.

Not surprisingly, with broad equity markets rising steadily and with the gold market correction now in its 18th month, U.S. investors and traders have lost some of their interest in gold.

After reaching record highs late last year in anticipation of the Fed’s latest monetary stimulus, there have been large outflows from gold ETFs and this trend is shown below using the SPDR Gold Shares ETF (GLD).

[To continue reading this article, please visit Seeking Alpha.]

Data and Statistics for these countries : Italy | All
Gold and Silver Prices for these countries : Italy | All
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Tim Iacono is the founder of Iacono Research, a subscription service providing market commentary and investment advisory services specializing in commodity based investing.
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