Gold ETF Flows: May 2019

Gold-backed ETFs experienced small outflows in May


Holdings in global gold-backed ETFs and similar products fell marginally in May by 2.2 tonnes (t) to 2,421t, equivalent to US$141mn in outflows as consistent European fund growth was offset by outflows in North America – early in the month – and in Asia. Global assets under management (AUM) in US dollars rose 1% to US$101bn as the price of gold rallied 1.7% during May. Year to date, global gold-backed ETFs have lost 0.5% in assets (19t, US$535mn), mostly due to heavy outflows in February, April and early May. However, higher uncertainty and market volatility have supported flight-to-quality flows into gold-backed ETFs in recent weeks (see below).

European fund assets regained their positive trend adding 15.9t (US$627mn, 1.3%) during the month. Two-thirds of the inflows came from the UK funds, where assets reached 505t, near all-time highs once again. Inflows in the UK were likely driven by uncertainty over parliamentary leadership as Teresa May resigned, resulting in a weaker pound sterling, which was down 4% against the US dollar on the month.

Outflows in North American funds (13.7t, US$580mn, 1.2%) were mostly driven by iShares Gold Trust (US$523mn) and SPDR® Gold Shares (US$134mn), the two largest funds globally. This trend was particularly acute in the first half of the month but has reversed to some degree in the past few weeks (see above). Despite the strength in the price of gold, momentum positioning weakened as net longs decreased in COMEX futures and short interest increased in North American funds, likely impacting flows in the products, while gold trading volumes in May increased to US$115bn per day, in line with the 2018 and 2019 averages. Gold option put/call skew in the US is the highest it’s been since 2016 (the difference between the implied volatility in calls versus puts), which is typically seen as a bullish sign.

Low-cost gold-backed ETFs in the US added US$90mn in assets, led by SPDR® Gold MiniShares (US$53mn) and Graniteshares Gold Trust (US$48mn) after small outflows in April.2 Low-cost assets have once again risen to all-time highs of 52t (US$2.2bn) or growth of 85% over the past year.

Assets in Asian gold-backed ETFs continued to decline sharply, losing 4.1t (US$171mn, 6.0%). The region has lost 10% of assets this quarter and 17% this year. Gold rallied 4% in renminbi, and despite the 6% selloff in the local stock market, investors appear to be shifting investments into risky assets.

Stock markets across the globe finished May sharply lower, their worst monthly return since the December 2018 selloff. And the selloff has continued into June. This was largely driven by continued US/China trade negotiation breakdowns, with the most recent downturn related to the surprise announcement that the US plans to impose tariffs on Mexico in the coming weeks. The risk-off environment created an opportunity for gold to showcase its role as a safe-haven asset. While gold was relatively flat when there were small movements in the stock market over the course of the month, gold was higher by 90bps, on average, each of the days the US stock market was down more than 1% (four times). Our research indicates that gold becomes much more inversely correlated with the stock market during multiple standard deviation moves to the downside — equivalent to spikes in the VIX.

Global bond markets continue to suggest concerns about the economic environment as reflected by decreasing yields, with the German 10y yield at all-time lows. The US 3m/10y curve is the most negative it’s been since the financial crisis, while the 2y/10y curve has recently steepened, despite falling yields. In all, the probability of a Fed rate cut this year has skyrocketed to nearly 100% and the US bond markets are now pricing in two to three rate cuts this year. Should the Fed confirm market expectations, our analysis suggests that gold tends to outperform when the Fed shifts to a neutral or dovish stance.

As we noted in our report, The impact of monetary policy on gold , shifts in economic and monetary policy could pave the way for support in gold’s performance in the second half of the year. In addition, flows into gold-backed ETFs have increased in late May and early June on the back of this latest increase in risk-off sentiment.

Regional flows1

European gold-backed ETF holdings are at all-time highs

  • Holdings in European funds rose by 15.9t (US$627mn, 1.3%)
  • North American funds had outflows of 13.7t (US$580mn, 1.2% AUM)
  • Funds listed in Asia decreased by 4.1t (US$171mn, 6%)
  • Other regions had outflows of 0.5t (US$17mn, 1.3%).

Individual flows

iShares Gold Trust lost 4% of its assets in May

  • In North America, iShares Gold Trust lost 12.7t (US$523mn, 4%) and SPDR® Gold Shares 3.5t (US$134, 0.4%), which represented the majority of the regions’ outflows; but low-cost gold-backed ETFs 2 added $90mn or 4% of assets
  • UK-based Invesco Physical Gold continued to add funds of 4.6t (US$192mn, 3.5%) over the month. This fund has the largest growth globally this year, adding 16.9t (US$712mn, 14.4%)
  • In China, Bosera’s listed fund lost US$131mn or 28% of its assets last month, and Huaan Yifu lost $41mn having lost US$391mn or 36% of its assets this year

Long-term trends

Asian gold-backed ETFs have lost 17% of their assets in 2019

  • European gold-backed ETF holdings represent its largest percentage of total global assets in history at 47% of total assets, trailing North America by 3%
  • Long-term strategic holders continue to add to low-cost gold-backed ETFs, despite bearish positioning in the larger, momentum-driven funds and futures markets
  • Holdings in Chinese funds have put a damper on total Asian holdings with investors moving into risky assets
  • Political uncertainty and a weaker pound sterling have supported inflows in UK-based gold-backed ETFs that remain near all-time highs.


  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. There are some months where 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 and movement of the US dollar and the timing of the flows. If, for example, European funds were to experience outflows early in the month when the price of gold was low but gained assets later in the month when the price of gold increased, and/or if the euro/dollar currency rate moved meaningfully when there were flows, there might be a discrepancy between tonnage change and 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.

Disclaimer [+]Disclaimer [-]