In a tale of two worlds, western ETF investors have remained skeptical of gold’s recent rally while Chinese investors flood into gold-backed exchange traded funds (ETFs).
In three of the last four years, gold has shot out of the starting blocks in January to post strong gains in the first quarter, only to have the rally fade later in the year. Much of the strong early-year interest has been large inflows to gold-backed ETFs.
But this year is different. Though gold is showing muscle in the post-swoon rally that began in December, the gains are not being driven by Western ETF buying this time, reports Sumit Roy for ETF.com. In fact, the two largest gold ETFs – SPDR Gold Trust (GLD) an iShares Gold Trust (IAU) had posted combined outflows of $440 million by January 18, according to FactSet.
Last year by this time, the two biggest funds had attracted net inflows of $850 million.
Even as investors in the West keep their distance from gold ETFs, Chinese investors are flooding into paper gold as a haven against the plunging yuan and a hard crackdown by Beijing on bitcoin holdings to halt capital flight from the country.
Bloomberg reports that the Huaan Yifu Gold ETF, China’s largest ETF backed by raw materials, attracted almost $72 million last week.
According to Bloomberg, “Huaan Yifu attracted the third-biggest inflow into gold ETFs in the week through Monday, behind Frankfurt-listed Xetra-Gold, which got $172.9 million, and London-listed Source Physical ETF, which lured $73.6 million.”
Mike Fuljenz is a member of the Newsmax Finance Brain Trust. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.
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