Demand For Precious Metal ETFs Soar

Credit: REUTERS/Mariya Gordeyeva

Cinthia Murphy, Managing Editor,

ETF investors have rushed back into precious metals ETFs as appetite for safe havens grows beyond the fixed income space.

Gold prices have recently hit six-year highs—up some 20% year to date—while silver is hovering at levels not seen in three years and platinum is at 18-month highs this year. With about a third of investment-grade debt globally yielding less than zero, it’s no surprise investors are finding the safety of precious metals—particularly gold—appealing.

Asset flows into precious metal ETFs have picked up pace. The SPDR Gold Trust (GLD) has picked up $4.3 billion, half of which has come in the past month or so. The iShares Gold Trust (IAU) gathered $2.2 billion; and the iShares Silver Trust (SLV) took in $1.2 billion. Chart 090919

That appetite for precious metals has not spilled into the mining space. ETFs offering access to gold miner stocks continue to face outflows despite what’s been stellar performance this year.

The VanEck Vectors Gold Miners ETF (GDX) and the VanEck Vectors Junior Gold Miners ETF (GDXJ) have each rallied more than 40% year to date, but they have also seen net redemptions totaling $2.4 billion and $1.1 billion, respectively, this year.

As’s Sumit Roy reports, “Perhaps investors haven’t been seduced by this year’s rally in miners because of the industry’s reputation for poor governance and abysmal long-term performance. Case in point: Since GDX’s inception in May 2006, the fund is down 16.9% compared with a positive 124.6% return for GLD.”

While demand for safety trades has helped support physically-backed metals ETFs, those accessing the space through equities have yet to attract assets this year.

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