Gold stocks ETFs to record more than 3,000 tonnes

Investors bought a lot of gold again in February, according to figures from the World Gold Council. In a month, the total supply of gold ETFs rose by 84.5 tonnes to a new all-time high of 3,033 tonnes. In both the United States and Europe, investors bought shares of gold ETFs, funds that hold physical gold as collateral. Due to an influx of new investors and the higher gold price, these funds currently manage more assets than in September 2012, when the gold price in dollars was ten percent higher.

The popularity of these investment vehicles is strongly correlated with the development of the Gold price, as the graph below shows. That's because ETFs are especially popular among investors and speculators, who jump in en masse when the price rises. With a share in gold ETFs, you follow the price of gold, but you don't actually own physical gold. Some of these funds offer the possibility to convert shares into physical bullion, but this is usually only possible for very large amounts.

Gold stocks ETFs to new all-time high in February

European investors are getting into gold

This rise in gold stocks shows that the market for gold ETFs has grown strongly in recent years, particularly in Europe. Meanwhile, European gold ETFs manage almost as much wealth as US ETFs. In the US, this amounts to $83.6 billion and in Europe to $77 billion. It is also striking that these funds are hardly getting off the ground in the Asian market. There, preference is given to tangible precious metals in the form of Gold Coins, Gold bars and jewelry.

The influx of European investors into the gold market in recent years is easy to explain. Not only is there a greater range of funds, but due to the low interest rates on savings, more people are Buy gold. Saving yields almost nothing these days, which has made the precious metal an interesting alternative.

In recent months, we have seen another large inflow of wealth, driven by uncertainty about the economy. Due to the weakening of the global economy and the outbreak of the coronavirus, many investors see gold as an alternative safe haven. Although it does not yield a return, it does not have a negative interest rate either. In addition, the precious metal has no counterparty risk, provided you buy it in the form of physical coins and bars.

European gold ETFs gain market share

This contribution was made from Geotrendlines