31 January, 2019

Bar and coin investment grew 4% in 2018, while annual inflows into gold-backed ETFs slowed to 68.9t.

  • European-listed funds drove yearly growth in ETFs, with global Q4 inflows fuelled by stock market volatility and signs of slowing economic growth
  • Bar and coin investment, responding to equity market fluctuations and higher local gold prices in many currencies, increased to 1,090.2t
  • Demand for official gold coins in Iran skyrocketed, helping to drive the global total to a five-year high of 236.4t
Tonnes 2017 2018 YoY
Investment 1,251.6 1,159.1 -7%
Bar & coin 1,045.2 1,090.2 4%
  India 169.3 162.4 -4%
  China 306.4 304.2 -1%
Gold-backed ETFs 206.4 68.9 -67%

Inflows into global gold-backed ETFs and similar products totalled 69t in 2018, equivalent to US$3.4bn of inflows. This was 67% lower than the 206.4t of inflows in 2017. Sizable annual flows into European-listed funds (+96.8t) drove growth in the sector. And while North American funds experienced heavy outflows for part of the year, strong global Q4 inflows propelled total AUM to 2,440t by year-end, up 3% y-o-y from 2,371t. For the first time since 2012, the value of total gold-backed ETF holdings finished the year above US$100bn (at US$100.6bn).

Global inflows of 112.4t during Q4 reversed the 104t of outflows from the previous quarter. Growth in Q4 was split almost equally between US-listed and European-listed funds, with inflows of 57.1t and 59.1t respectively.

Europe was the only region to see net tonnage growth in 2018. A combination of widespread regional political uncertainty and negative yields on both sovereign debt and highly-rated corporate bonds underpinned investment in European-listed funds throughout the year. Inflows gained momentum in December, fuelled by a rising gold price against a background of stock market volatility and the US-China trade conflict. 

AUM in European-listed funds grew to 1,097t (US$45.2bn or €39.4bn) by year-end, up 10% y-o-y. Their share of global holdings has been increasing steadily over the last couple of years and now accounts for 45% of global holdings, up from 42% at the end of 2016. 

North America fund inflows of 57.1t in Q4 stemmed Q3 losses, but overall these products shed 13.4t over the year. During Q3, holdings in North American products fell by 75.3t as investors focused on the healthy domestic economy, strong dollar, rising equity markets and weaker gold price. This environment changed in Q4, with an increase in stock market volatility and mounting concern that US economic conditions may have peaked. And gold-backed ETFs benefited from this environment, combined as it was with a rising gold price. 

At the end of 2018, North American-listed funds represented 50% of global holdings in gold-backed ETFs, with a collective AUM of 1,230.4t (US$50.7bn).


Stock market weakness in Q4 helped fuel inflows into gold-backed ETFs

Stock market weakness in Q4 helped fuel inflows into gold-backed ETFs

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


Holdings of funds listed in other regions saw modest declines in 2018: Asian-listed funds lost 4.7t on an annual basis, as H2 losses wiped out the 16.7t of inflows seen in Q2. This corresponded with a downturn in China’s stock market and a weakening of the yuan against the dollar, which may be indicative of investors taking profit at a higher local price and/or selling as a source of liquidity. The market saw further rotation out of Bosera’s funds (which lost a combined 20.1t), mainly among individual investors on the Alibaba platform. Meanwhile, Huaan Yifu Gold ETF added 7.7t to AUM during 2018, as investors sought to hedge fluctuations in risky assets, putting it in the top 10 performing individual funds globally. 

2019 has seen a positive start. So far in January, gold-backed ETFs have found favour among investors: at the time of writing, global inflows have reached 59.0t. North-American funds are headlining this activity, with investors conscious of the continued trade spat between the US and China, particularly as global growth projections are scaled back. Adjustments to US rate hike expectations and the ongoing US government shutdown are also fuelling the inflows. 

European investors are focused on issues closer to home. Early January saw the euro gold price reach a widely-reported 18-month high, spurring further investor interest in that region. Meanwhile, the turn of the year brought the prospect of European parliamentary elections – scheduled for May – closer to mind and raised concerns that populist parties could gain a greater foothold in Brussels. Already wary over Brexit and the precarious state of both Italy’s public finances and its relationship with the EU, investors have steadily added to their safe-haven holdings of gold-backed ETFs.

Bars and coins

Global bar and coin demand rose 4% year on year, reaching 1,090t. A pick-up in retail investment demand in the second half of the year, boosted by the fall in the gold price across most currencies in Q3 and heightened equity market volatility in Q4, made up for the relatively quiet H1.


Bar and coin demand jumped in the second half of 2018

Bar and coin demand jumped in the second half of 2018

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer


Delving into specific product categories, bar sales were steady at 781.6t. Indeed, bar demand has been remarkably stable over the past five years with annual demand anchored between a low of 780t in 2014 and a high of 797t in 2016. 

The official coin market, however, saw annual demand surge 26% to 236t, the second highest level on record – the previous high was 270.9t in 2013. 

Coin demand flourished in a few countries, most notably Iran and South Africa, where retail investor concerns around stock market volatility, currency weakness and geopolitical uncertainty were common themes. 

China recorded another good year, with annual bar and coin demand steady at 304.2t. Retail investor fears over a weakening currency and stock market volatility have supported demand over the past two years. Deteriorating US-China relations in 2018 added to the sense of foreboding and contributed to heightened financial market volatility; over the course of the year the yuan fell 5% against the dollar while the CSI 300 dropped 25%. The Shanghai Gold Benchmark price, however, rose 3.4%.

China’s bar and coin market finished stronger than it started, with H2 demand 157.4t versus 146.8t in the first six months of the year. Demand peaked in Q3 when in August the price fell to RMB262/g, its lowest level since 2016. The market remained healthy in the fourth quarter at 70.9t, up from 68.6t in Q4 2017 and above the quarterly average of 66t since the start of 2014. 

By contrast, India, the second largest bar and coin market in the world, saw annual demand fall 4% to 106.2t. The gold market received its usual seasonal boost during Diwali, leaving fourth quarter demand at 56.4t – the strongest quarter of the year. But it was still 5% down on Q4 2017. Indeed, it was the weakest fourth quarter since 2008.

India’s bar and coin market faced challenges throughout the year. The weakness of the Indian rupee pushed the gold price to Rs31,900/10g during October, its highest level since June 2012. And India’s leading stock market – the SENSEX – continued to hit new highs, grabbing the attention of many urban investors.  Finally, the government’s continued clamp down on illicit money has removed an element of demand from the market.  

Yet despite these challenges, India’s gold investment market continued to innovate. Mobile apps and online platforms such as PayTM Gold, Phone Pe, MobiKwik and Safe Gold continued to gain traction,1 albeit from a very low base.  Businesses such as these allow investors to gain exposure to gold for as little as one rupee and, according to media reports, have seen rapid growth in their customer base. 

Bar and coin demand in South East Asia enjoyed a good year, with annual demand rising in Indonesia (+10%), Thailand (+7%) and Vietnam (+9%). Combined, these countries accounted for 131.3t, equal to 82% of the South East Asian bar and coin market in 2018.

Several themes underpinned the health of these markets.  Retail investors were concerned about the outlook for their respective local currencies. Over the course of the year the Vietnamese dong weakened 2% against the dollar, while the Indonesian rupiah fell by 6%. And although the Thai bhat finished the year flat, it fell 7% between April and July. They were also unnerved by equity market volatility, with most of the main regional indices finishing the year down. After rising 6% in January, the MSCI South East Asian equity index fell 17% over the remaining 11 months. Yet, at the same time, these economies continued to grow. Unemployment rates in Thailand, Vietnam and Indonesia remained stable at low levels compared to the recent past.   

There were market-specific factors, too. In Thailand, for example, retail investors flocked to gold as rumours of an imminent clamp down on unaccounted money rippled through the market. Although the clamp down failed to materialise, the rumour did spur gold demand. 

Middle East demand doubled in 2018, shooting up from 43.2t in 2017 to 87.1t in 2018. This was almost entirely due to Iran, where annual bar and coin demand ballooned from 19.2t in 2017 to 61.8t in 2018. The central bank’s decision to increase the number of coins it released into the market helped satisfy Iranian investor demand and boosted global coin demand. 

After an exceptionally strong Q3, Iranian demand eased a little in the final quarter. The rial strengthened following the central bank’s intervention in the foreign exchange market, and authorities moved to limit gold speculation by closing the coin futures market. Iran aside, the rest of the Middle Eastern bar and coin market was lacklustre. 


Doubling of annual Middle Eastern bar & coin demand almost entirely due to Iran

Doubling of annual Middle Eastern bar & coin demand almost entirely due to Iran

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer


2018 annual bar and coin demand in Turkey fell 28% y-o-y, from 52.4t to 37.8t. The sharp fall is partly due to a relatively strong 2017, which was fuelled by the government’s fiscal stimulus programme and investors’ expectations of higher inflation and a weaker currency. 

These expectations were realised in 2018, with CPI doubling to 16% and the Turkish lira reaching an all-time low against the dollar. Conversely, the Turkish lira gold price hit an all-time high, dampening demand and encouraging higher levels of recycling. 

The picture improved in Q4. The Turkish lira came off its lows, the local gold price came off its highs and retail investment demand recovered: it rose 66% y-o-y to 8.4t, with coin sales outperforming bar sales.  

European annual bar and coin demand was 171.1t, down 11% on 2017 and its lowest annual number since 2007. Demand declined in Germany (-9%), Switzerland (-13%) and Austria (-16%). H1 was especially weak: it was the lowest half year since 2008, partly due to the relatively range-bound gold price. Activity picked up in H2 as stock market volatility increased and the euro gold price fell (in Q3) to its lowest level since 2015 before bouncing higher. 

The one bright spot in Europe was the UK. Annual bar and coin investment was 11.6t, up 12% yoy. Demand of 6.87t was the strongest half yearly figure since 2012, as investors looked ahead to 29 March 2019 – the day the UK is due to leave the EU – with a sense of trepidation. 

US bar and coin demand remained sluggish. Annual demand was 28.1t, its lowest level since 2007. For most of the year a range-bound gold price, buoyant equity market and expectations of higher rates reduced investor interest in gold. Often, bar and coin investors use price dips as entry points, but the pullback in Q3 failed to deliver. Subsequently, increased volatility in stock markets and a higher gold price, failed to tease out much investor interest. 


  1. The World Gold Council holds a minority stake in Digital Gold India Private Limited which offers Safe Gold. The World Gold Council and its affiliates may have an interest in or affiliation with other entities or instruments referenced in this report.

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