Gold ETF Price Review 2019

Author: Corey McDowell - Economics Editor

Published: 13 Jan 2020

Last Updated: 13 Jan 2020

Contents

Gold-backed exchange traded funds (ETFs) reached all-time highs in 2019, growing on average around 14% worldwide. In US dollar terms, these ETFs had net inflows of around $19.2 billion, which represents just over 400 metric tons of gold. These net inflows were mostly driven by funds in North America and Europe, which increased by 14.4% and 13.6% respectively. A note of interest, however, is that ETF flows in Asia were relatively flat throughout 2019, dropping by 0.3%, which perhaps could be explained by the Asian tradition of generally favouring physical gold possession. 

Sources: Bloomberg, Company Filings, ICE Benchmark Administration, World Gold Council

The figures above refer to ETFs that are backed by at least 90% physical gold and the World Gold Council (WGC) make adjustments based on estimations on physical gold holdings. ETFs are securities that can be bought on a stock exchange and in this case may not be fully backed by gold; Gold ETF holders do not actually own the gold they have “bought” but rather possess a share in a fund, which is essentially a debt. However, these shares do track the live price of gold and will fluctuate accordingly. 

Whilst possessing physical gold is the proper way of owning the precious metal, gold ETFs give an indicator as to the expectations of investors. With these figures, it may be a sign that investors are getting spooked by rising geopolitical concerns and warnings from world financial institutions on the state of the global economy.

Further Reading

We have a guide for choosing between gold ETFs or physical gold and on paper gold for interested investors. 

You may be interested in reading through our gold guide

You may wish to read more articles in our precious metal and coin news section. 

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