ETF Strategy/George Watson/4-11-2017
“Source has reported that its Source Physical Gold ETP (LON: SGLD) has recorded over $500m of net new assets year to date (5 April), as the gold price has risen 9% during the same period. According to the ETF issuer, the figures show investors are returning “aggressively” to gold. . .
ETF Securities also reported strong flows into gold, with its gold ETPs seeing a combined $42m of inflows in the week beginning 3 April. The largest of these is ETFS Physical Gold (LON: PHAU) which has AUM of $5.9bn and fees of 0.39%.”
MK note: We have reported consistently over the past several weeks that while retail private investors seem to be either enamored with the stock market or in a quandary as to what they should do next, professional investors, for reasons of their own, are anteing-up decisively in this gold market. Because professional investors’ principal objective is to place a bet on the price direction, their chosen avenue for investment is gold ETFs rather than genuine physical ownership of coins and bullion. Retail private investors tend to focus their interest on asset preservation and as a result generally favor actual physical ownership of gold and silver in the form of coins and bullion.
My thinking is that professionals investors know full well what the impact of Fed policy will be on the gold market (as outlined in my previous post and more extensively in the March issue of our News & Views newsletter). And in fact, gold and silver have already amply rewarded professional investors who have been in this market since January. At this writing, gold is up 10.5% on the year and silver is up a cool 15%. (You wouldn’t know it based on the mainstream financial press’ emphasis.)
With demand continuing to ramp up, as evidenced by the report quoted above (U.S. ETF demand is also up sharply since the beginning of the year), professional investors seem to think that the impetus behind the early year price strength has some longer-term staying power. The retail private investor, in the meanwhile, judging from the renewed interest we are beginning to see at our offices, is beginning to catch-on to what the professionals have been thinking for quite some time now.