Gold breaks all records in July

Gold bullion

The World Gold Council’s latest report finds that gold-backed ETFs recorded their eighth consecutive month of positive flows, adding 166 tonnes (t) in July – equivalent to USD9.7 billion or 4.1 per cent of assets under management (AUM).

Global holdings have once again reached a new all-time high of 3,785t1 and the price of gold hit a record high of USD1,976/oz by the July-end, leaving global AUM standing at USD239 billion, the WGC writes.

“Global net inflows of 899t (USD49.1 billion) to date are considerably higher than previous annual highs, and the trend of inflows has continued in the first few trading days of August as the price of gold has breached USD2,000/oz.”

Regionally, while all regions had net inflows in July, North American funds, once again, led by a significant margin, accounted for 75 per cent of global net inflows. The region added 118t (USD7.0 billion, 5.5 per cent AUM). European-listed funds added 40t (USD2.1 billion, 2.1 per cent AUM). Asian-listed fund holdings rose meaningfully during the month, by 4.9t (USD370 million, 5.6 per cent AUM). Funds listed in other regions registered a 3.4t (USD218 million, 5.5 per cent AUM) gain.

Overall, July was notable for several ‘all-time’ records, with silver enjoying its strongest monthly performance ever, rallying 34 per cent, and gold reaching its highs, rallying by 11 per cent and, as of the end of July, higher by nearly 30 per cent on the year.

In North America, SPDR Gold Shares led global inflows, adding 63t (USD3.8 billion, 5.6 per cent), while iShares Gold Trust added 35.5t (USD2.1 billion, 8.3 per cent). SPDR Gold MiniShares led low-cost inflows adding 6.9t (USD414 million, 16.4 per cent), followed by Aberdeen Standard Physical Gold Shares, which added 2.6t (USD160 million, 7.3 per cent). It is worth noting that all these funds, reached record levels of AUM, the WGC says.

In Europe, Invesco Physical Gold Etc added 11.8t (USD696 million, 6.1 per cent) and iShares Physical Gold added 9.4t (USD581 million, 4.5 per cent). WisdomTree Physical Gold was the only fund globally with outflows more than 1t with 1.8t (USD116 million, 1.4 per cent) coming out during the month, the WGC says.

The result from Invesco is that is has reduced the free on its physical gold ETC, as the record flows took it to over USD14 billion in assets.

Invesco writes: “Gold has been one of the year’s best-performing assets, with a return of 34 per cent for the year to 5 August 2020, the day the gold price broke through the $2,000/ounce mark. Analysis by Invesco shows that gold exchange-traded products listed in Europe raised more than USD10 billion of net new assets in the first seven months of 2020, including USD1.4 billion in July. The Invesco Physical Gold ETC accounted for more than 50 per cent of the flows during the latest month and is now over USD14 billion of assets. Gary Buxton, Head of EMEA ETF at Invesco, says: “For more than a decade, our gold ETC has provided investors with an efficient way to gain exposure to the performance of the gold price. As the ETC has grown significantly in size, we have been able to share some of the economic and operational advantages with our investors. We are now doing this again with a fee cut.”      

Invesco has reduced the fee on its Physical Gold ETC to 0.15 per cent p.a. from 0.19 per cent.

Chris Mellor, Head of EMEA Equity and Commodity ETF Product Management at Invesco, says: “Gold has been driven by not only the economic impact of the pandemic but also the reaction of central banks to the crisis. Low to zero interest rates, negative-yielding debt, ballooning central bank balance sheets, these are all factors that should favour holding real assets such as gold, especially at a time of such uncertainty. And gold exchange-traded products have given investors an effective way to gain exposure in their portfolios.”

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Beverly Chandler
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