ETF Monthly commentary

Global gold-backed ETF holdings grew incrementally in March



Holdings in global gold-backed ETFs and similar products rose slightly in March by 2 tonnes(t) to 2,481t, equivalent to US$120mn in inflows. Global assets under management (AUM) fell by 1.7% in US dollars to US$103bn over the month, driven by the 2% decline in the price of gold during the same period. Global gold-backed ETF flows remain positive on the year (US$1.9bn, 1.9% AUM) on the back of strong January inflows.

ETF monthly flows

Sources: Bloomberg, Company Filings, ICE Benchmark Administration, Shanghai Gold Exchange, World Gold Council; Disclaimer

All regions except Asia saw marginal increases in holdings. Interestingly, by month-end, North American funds had fully reversed the US$2bn in outflows seen earlier in the month. The reversal coincided with a rally in gold, in US dollar terms, which was linked to the Fed’s adoption of a more neutral monetary policy stance. Our recent report The impact of monetary policy on gold finds that, historically, a change in the Fed’s policy from tightening to neutral results in gold increasing meaningfully over the subsequent 12 months.

In March, gold trading volumes increased 15% above the 2018 averages to US$125bn per day. Sentiment and positioning in COMEX futures continued to increase from their lows, as the price of gold moved higher during the second half of the month. However, these levels still remain below historical averages.

US stocks had their strongest quarterly performance in 10 years in Q1, supported in part by a decline in bond yields. However, the extent of the divergence in expectations about the strength of the economy between stock and bond investors is noteworthy. The rebound in stocks have again pushed valuations to historically high levels, signaling confidence by investors. Bond holders appear to have a more pessimistic view of the global economy and warnings signs have emerged in global fixed income markets. For example, German 10-year bund yields turned negative for the first time since 2016, while the US 3-month / 10-yr curve inverted: a phenomenon that almost always precedes a recession in the US.

This decoupling between stock and fixed income markets, combined with US/China trade relations and Brexit uncertainty are some examples of dynamics that continue to worry investors.

Looking forward, we believe that financial market uncertainty, as well as the shift in monetary policy and possibly a range-bound US dollar will support investments in gold (see our 2019 Outlook).

Regional flows1

North American funds reversed early month outflows to finish the month with incremental inflows

  • North American funds had inflows of 2.5t (US$104mn, 0.2% AUM)
  • Holdings in European funds rose fractionally by 0.2t (US$52mn, 0.1%)
  • Funds listed in Asia decreased by 1.2t (US$45mn, 1.4%)1
  • Other regions were virtually flat, rising by 0.2t (US$9mn, 0.7%)

Individual flows

iShares Gold Trust led global inflows following mid-month strength in gold prices

  • In North America, iShares Gold Trust added 2t (US$87mn, 0.7%) followed by SPDR® Gold MiniShares which added 0.5t (US$19mn, 3%)
  • European inflows were led by Xtrackers Physical GBP Hedged which added 1.5t (US$64mn, 89%) and Xetra which added 1.5t (US$37mn, 0.45%); ETFS Physical had outflows of 4.6t (US$190mn, 2.7%) and UBS CHF Hedged had outflows of 1.2t (US$49mn, 5.6%)
  • In China, Bosera Gold’s unlisted funds reported their quarterly flows and the 930 fund had outflows of 1.4t (US$60mn, 31%) during the quarter; Huaan Yifu had outflows of 1.1t (US$45mn, 4.4%)

Long-term trends

ETF holdings have grown 2% in 2019

  • Late March inflows appear to resume an upward trend in holdings after a possibly temporary reversal in February; to date, 2019 has collective inflows of 40t (US$1.9bn, 1.8%), driven by strong inflows in January
  • Total holdings in tonnes (2,481), remain near levels last seen in early 2013, when the price of gold was 25% higher
  • Holdings in UK-based gold-backed ETFs remain near all-time highs, likely driven by the uncertainty surrounding Brexit
  • Low-cost ETFs added 22t (~US$878mn) in the past nine months, representing growth of 67%2. These low-cost flows represent all of the net inflows in North America over the same time period


  1. Note: We calculate gold-backed ETF flows both in ounces/tonnes of gold and in US dollars because these two metrics are relevant in understanding funds’ performance. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance industry standard that gives a perspective of how much investment reaches the funds. This month, the reported flows measured in tonnes of gold and their dollar value equivalent seem inconsistent across regions. Both figures are correct. The disparity is due to the interaction between the performance of the gold price intra-month, the direction of the dollar and the timing of the flows.

  2. Low-cost US-based gold backed ETFs are defined as gold-backed ETFs that trade on US markets with annual management fees of 20bps or less.

  3. March gold-backed ETF flows were revised based on new information we obtained since the initial publication on 4 April 2019. First, Bosera has since published its quarterly holdings for two non-listed funds we track. In addition, we removed FinEx Gold, listed in Russia. The fund’s prospectus allows for physical gold holdings but it currently only holds swaps making it ineligible for the list of funds we track, as we require physical gold holdings of at least 90% of their total gold exposure. See more on ETF flows methodology.

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