Retail ETF Investors Help Power Gold Demand

by: Tom Lydon November 21, 2008 | about stocks: DGL / GLD    
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Tom Lydon

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Gold demand is surging even as prices fall, and the largest gold exchange traded fund’s increased holdings isn’t because of who you might think.

Retail investors are sharply increasing their demand for more gold bars and coins, as it has presented a safe place to keep their money during the market meltdowns. Last year, people bought 38 tons of gold coins in the third quarter alone; this year, that figure has rocketed to 61 tons, reports Dan Grech for Marketplace.

Meanwhile, institutional investors have been in control, selling heavily to offset retail buying and driving prices to new lows, reports Moming Zhou for MarketWatch.

Gold has experienced a net inflow of 232 tons, for the third quarter, compared to 150 tons in the same time one year ago. Gold holdings within ETFs is up 150 tons, with a peak in September after Lehman Brothers went bankrupt. There has been no slowdown in demand for gold since, not even when financial institutions fell out and had to sell their gold assets.

The rise in gold within ETFs has to be because the funds have made it so much easier and affordable for the retail investor to get into gold without having to find storage space. Gold is still below long-term trend lines, so according to out strategy at ETF Trends, we would not consider it. If you are interested in gold, keep an eye on it and be aware of the volatility involved.

  • SPDR Gold Shares (GLD), down 12.3% year-to-date

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Gold ETFs

  • PowerShares DB Gold (DGL), down 14% year-to-date

Gold ETF

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This article has 6 comments:

  •  
    Nov 21 03:35 PM
    GLD up about 7 percent today. By Kitco calculations, spot gold is down under 1 percent for the last 52 weeks. Not bad for a barbaric relic.
    Reply | Link to Comment
  •  
    Nov 22 09:42 AM
    Just wondering if all these gold ETF's are backed by actual gold... just wondering... (or are we playing in the twilight zone again)
    Reply | Link to Comment
  •  
    Nov 22 09:46 AM
    Hmmm why do you call it a "relic"? We like to look at it, along with diamonds, pearls, etc. gee, you want to take away all the fun and mystique? Now now, let us play will ya. Besides, what if some government actually pegs their worthless paper to something of value. Boy, wouldn't that be neuveau smart if you owned some of that stuff. China has to do something to convince the world that they are for real on the global stage finally, not just by buying aclot of steel or copper. They need to convince their money is something too, and make it #7 on the currency hit parade. I have been expecting them to peg their money to the silver hoard they have been silently buying. And one more thing, wht about the one ounce of gold each Chinese family is supposed to be holding for their government? Any more word of that?

    I'll get back to you on that.


    On Nov 21 03:35 PM GMiki wrote:

    > GLD up about 7 percent today. By Kitco calculations, spot gold is
    > down under 1 percent for the last 52 weeks. Not bad for a barbaric
    > relic.
    Reply | Link to Comment
  •  
    Nov 22 10:27 AM
    WHERE IS MARK ANTHONY? HE'S BEEN SO QUIET SINCE HIS LAST PALLADIUM PUMP JOB...
    Reply | Link to Comment
  •  
    Nov 23 12:23 AM
    what are ETF's ? If you dont take the time to answer me, Capt, then will someone else answer? Just a ? from a rook
    Reply | Link to Comment
  •  
    Nov 23 05:31 PM



    On Nov 23 12:23 AM The Rookie wrote:

    > what are ETF's ? If you dont take the time to answer me, Capt, then
    > will someone else answer? Just a ? from a rook

    ETF's are Exchange Traded Funds, they can be traded like ordinary stocks. To get a better Education try Googling ETF's
    Reply | Link to Comment
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