Page 16 - Bullion World Issue 1 May 2021

Bullion World | Issue 01 | May 2021

The Story of

Exchange-Traded

Products

“ With a record annual

increase of 877t or 31%,
collective gold ETP
Gold exchange-traded products (ETPs) institutional investors whose mandate holdings hit a series of
are securities listed on stock exchanges precludes them from holding futures or fresh all-time highs during
that track gold prices through holding physical commodities to gain exposure
physical, futures or over-the-counter to the gold price. 2020 before peaking at
(OTC) positions. By far the most popular 3,916t in November. If
and liquid ETPs are those backed At the time of writing, there are over measured in value terms,
by physical gold. For this reason, 80 gold ETPs listed in more than 10 2020’s growth was even
the following discussion focuses on countries. The first physical backed ETP more pronounced, with
products belonging to this category. was launched in Australia in 2003. From the value of combined
Key advantages of ETPs include safety, that point until 2012, gold ETPs enjoyed
transparency, liquidity and ease of uninterrupted annual growth on the ETPs at its peak
access. In addition, ETPs enable those back of the previous bull market in gold. exceeding $250bn for
the first time ever. ”

Following sizeable outflows over 2013-
15, gold ETPs gained traction again
before investment inflows accelerated
during 2020. With a record annual
increase of 877t or 31%, collective gold
ETP holdings hit a series of fresh all-time
highs during 2020 before peaking at
3,916t in November. If measured in value
terms, 2020’s growth was even more
pronounced, with the value of combined
ETPs at its peak exceeding $250bn for
the first time ever. The strength of gold
ETPs, especially at a time when gold
demand in other areas was severely
affected by the COVID-19 crisis, was the
principal driver of the gold rally to new
all-time highs during 2020.

Mr Philip Newman
Metals Focus

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