Gold ETF Flows: December 2018

Global gold-backed ETF holdings grew 3% in 2018


Holdings in global gold-backed ETFs and similar products rose by 69 tonnes(t) to 2,440t in 2018, equivalent to US$3.4bn of inflows. Global gold-backed ETFs grew 3% in 2018, driven by strong growth in European funds and increased global inflows during December.** This is the first time since 2012 that the value of total gold-backed ETF holdings has finished the year above US$100bn. 


ETF monthly flows

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

2018 inflows were driven primarily by European-based funds, which grew 10% over the year (96.8t, $4.5bn). For a second straight year Germany led country inflows, adding US$2.6bn. UK-based funds followed with inflows of $1.7bn, largely due to uncertainty surrounding Brexit.

On an absolute basis, North American funds – which tend to be more price and momentum driven – led outflows, driven by the weak performance of gold during the third quarter. These flows reversed in the fourth quarter to make up most of the previous losses. Low-cost US-based ETFs2 were a bright spot in North America, raising $775mn in assets, a sign of increased demand for holding gold as a long-term strategic asset.

Many funds in Asia and Other countries had outflows, likely driven by profit taking. The weaker emerging currencies, many of which fell over 10-20%, boosted local returns of gold and highlighted its global nature; i.e. it is not always viewed in US-dollar terms.

The price of gold finished relatively flat on the year (-1.1%), rallying 9% off the August lows and shining as a safe haven in the fourth quarter, while markets like the S&P 500 fell 14% over the same period. This occurred against the backdrop of a strong US dollar, up 1%. Long-dollar hedged gold finished the year higher by more than 5%, again buoyed by the dollar – the strongest performing major index on the year.

Global stock markets remained volatile, driven by trade conflict, geopolitical concerns, monetary policy uncertainty, credit concerns and lofty stock market valuations. Most non-US indices fell well over 10%. Led by oil, global commodities were lower by 15%. The US 2/10 Treasury yield curve flattened to the lowest levels since the beginning of the Financial Crisis as investors became concerned that US economic conditions may have peaked and could be showing potential for a recession in 2019 or 2020. 

Overall, gold trading volumes grew 2% y-o-y, driven by growth in global gold futures markets. Gold markets’ trading volumes averaged between US$100bn and US$125bn a day in 2018. The LBMA announced a new reporting system for gold OTC trading volume (LBMA-i), which will provide improved transparency into the liquidity of the gold market

Sentiment and positioning in COMEX futures remain bearish, well below historical averages, although not as extreme as during the Q3 lows in the price of gold. As discussed in our recent note, Gold recoils amid selloff but may rebound, extreme bearish positioning in futures has historically preceded strong rallies in the price of gold

December and Q4 Flows

Global flows finished the year strong rising 76t (US$3.1bn, 3%) in December, the third month in a row with net inflows. The fourth quarter was strong as global assets grew US$4.8bn or 5%. The inflows over the month and quarter were largely split between North America and Europe, each of which increased approximately US$2.5bn. By the end of the third quarter North America had lost 6.5% of its assets, ending the year nearly flat, down 1.3%.

2018 Regional flows1

European funds grew 10% in 2018

  • Holdings in European funds rose by 96.8t (US$4.5bn, 10%)
  • North American funds saw outflows of 13.4t (US$667mn, 1.3% AUM)
  • Funds listed in Asia lost total assets of 4.7t and had outflows of US$69mn1
  • Other regions lost 9.7t (US$393mn, 29%) 

2018 Individual flows

Xtrackers Physical Gold led global inflows with US$1.9bn

  • Xtrackers Physical Gold in Germany led global inflows, adding 46t (US$1.9bn) and growing 295% on the year
  • iShares Gold Trust led North American inflows with 36.7t (US$1.6bn, 16%). SPDR® Gold Shares led global outflows, losing 49.8t (US$1.8bn, 5%), while the Central Fund of Canada lost 9t (US$ 890mn) or 41% of its assets
  • In Asia, Chinese-listed Huaan Yiffu added 7.7t (US$315mn, 40%), whereas the collective holdings of the three Bosera funds fell 12.8t or US$460mn
  • NewGold in South Africa lost 11.1t (US$454mn, 36%). The country’s base currency fell 16%, elevating gold returns for South African investors who likely took profits following a double-digit local gain


  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 year, 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. For example, Europe experienced outflows early in the month when the price of gold was low but gained assets later in month when the price of gold increased.

  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.

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