Page 17 - Bullion World Issue 1 May 2021

Tonnes Annual Changes in Global Gold ETP Holdings Bullion World | Issue 01 | May 2021
1,000 holdings with reporting requirements
800 accounted for almost 50% of SPDR Gold
Share’s outstanding shares, which is the
600 world’s biggest gold ETP, accounting
400 for 31% of global ETP holdings at that
200 time. This compares to 26% for iShares
Silver Trust, the biggest silver ETP with
0 a market share of 52%. In contrast
-200 to professional investors, many retail
investors often see falling prices as an
-400
opportunity to buy, but profit taking from
-600 such players can be restrained. These
-800 factors help to explain an explosion of
demand for gold bars and coins in 2013
-1,000
2003 2006 2009 2012 2015 2018 at a time when global gold ETPs suffered
Source: World Gold Council an investor exodus.
Looking at fluctuations in gold ETP optimism about On a regional
holdings, the yellow metal’s appeal as the prospects At end-2020, institutional basis, global
Tonnes
a haven asset during economic and of the global “holdings with reporting holdings were
4,500
financial turmoil was the primary driver economy requirements accounted initially dominated
behind the above investment inflows. also reduced for almost 50% of SPDR by North American
4,000
This also explains why 2009 (in the gold’s appeal. funds, with their
3,500
aftermath of the great financial crisis) Low inflation, Gold Share’s outstanding contribution at
3,000
and 2020 (amid the worst pandemic this particularly in the shares, which is the times exceeding
2,500
century) witnessed the highest demand US, was another world’s biggest gold ETP, 80%. With
2,000
for gold ETPs. negative factor. In increasing listings
1,500 accounting for 31% of of gold ETPs in
2013 alone, 887t

Leaving aside a flight to quality assets was liquidated global ETP holdings at that Europe since
1,000
Tonnes
during the crisis, policy-makers’ in gold ETPs, time. This compares to 26% the late 2000s,
500
1,000
reactions to each challenge were also which was the for iShares Silver Trust, the there has been a
0
important in encouraging investor Jan-12 800 Jan-15 Jan-18 Jan-21 massive inflows
Jan-03
Jan-09
Jan-06
main explanation
biggest silver ETP with a
interest in gold ETPs. In particular, behind the steep into European
600
Europe
Others
North America
monetary authorities worldwide price pull-back market share of 52%. ” funds, which now
400
have cut rates, and many launched that year. Even make up for over
200
unprecedented levels of massive though such rotations out of gold 40% of the global total. Moreover, due to
quantitative easing. Lower short-term slowed thereafter, a lack of conviction the persistence of monetary loosening
0
interest rates and yields typically towards the yellow metal saw such ETP and deepening negative interest rates,
-200
benefit gold investment by limiting the redemptions persist over much of 2014- growth in European ETPs in recent years
-400
opportunity cost of holding such zero- 15, resulting in prolonged weakness in (until the onset of the COVID crisis) was
yielding assets. The crisis also resulted the gold price over that period. more robust than those listed in North
-600
in an exceptional wave of fiscal policy -800 America. Finally, thanks to the ongoing
accommodation in most major markets. Another important feature worth liberation of financial markets, ETPs have
-1,000
In 2020, all this has been amplified by highlighting is that institutional investors been also introduced in some emerging
2015
2018
2009
2006
2003
2012
another dynamic; bond yields were account for a significantly higher portion markets, notably in China and India,
already low prior to the COVID-19 crisis of gold ETPs than that seen in silver. though volumes in absolute terms remain
and policy action has put them under To illustrate, at end-2020, institutional rather modest in many of these locations.
even further pressure. The possibility of
inflationary pressures ahead as a result Tonnes Global Gold ETP Holdings
of this is another issue. All these factors 4,500
encouraged institutional investors to 4,000
raise their exposure to gold during 2020. 3,500
This was in sharp to 2013-15 when gold
ETPs suffered significant outflows, as 3,000
the macroeconomic backdrop turned 2,500
unfavourable to gold investment. 2,000
Back then, expectations of faster than 1,500
previously expected tapering and an 1,000
end to quantitative easing (QE) in the 500
US, and its divergence from that of most
0
other major reserve currencies had Jan-03 Jan-06 Jan-09 Jan-12 Jan-15 Jan-18 Jan-21
raised the opportunity cost of carrying
gold. Strong equities and growing North America Europe Others
Source: World Gold Council
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