Gold ETFs gain $213 per ounce in 2009
LONDON (Commodity Online): Gold price has been zooming throughout 2009, the year that has just passed by. Investors, traders, central banks and common people have been lured by the yellow charm that gold is offering these days. Everyone in the investing world is in one way or the other is infested with the luster of gold.
Physical gold has been the most sought-after metal in the bullion market globally. But paper gold—commonly known as the gold exchange traded funds (ETFs)—are competing with the physical gold these days. Investors have been piling their money into Gold ETFs that inflows into several large ETF funds have been increasing in the last several months.
There are a number of factors that make the various gold ETF products unique. The most important is the manner in which ETFs achieve exposure to gold prices. Some gold ETFs buy and physically hold gold bullion (i.e., they have massive collections of gold bars), while others invest in futures contracts.
Physically-backed gold ETFs will obviously track the spot price of gold more accurately, since the value of the underlying holdings depends solely on the market price of bullion.
With ETFs around, investors have found a way to put their money in gold without having to worry about purity and physical security. Moreover, with ETFs around it is easy for any analyst to compare gold to other investments. When an investor looks at ETF performance data, s/he can also compare the returns of gold-based investments with equity-based ones.
What has been the investment scene in the gold ETF front in 2009?
According to statistics compiled by Commodity Online Bullion Research, investor holdings in the major global gold ETFs have increased as gold prices jumped by a record 39%. Cumulative daily gold investment flows into ETFs during 2009 were at $16.9 billion and the value of the gold these funds was around $61.3 billion, a gain of 84% over 2009.
The research report shows that gold holdings in the major global ETFs in 2009 gained by 565 tonnes with a net price rise of $213/ounce.
"Gold ETFs have not gained as high as gold price in 2009. While gold price that was around $800 per ounce in 2008 zoomed to a record $1227 per ounce by November, 2009, gold holdings in the ETFs gained by $213 per ounce. However, for an investor, gold ETFs have given rich returns," points out Commodity Online Bullion Research analyst Mark Robinson.
The change in value of the gold in the funds is not the same as the net daily flows because, of course, the tonnages going in and out of the funds can vary massively on a day-to-day basis. The net increase in the value of the gold in the funds exceeded the net amount of dollars going into the instruments by some 65%.
In the last week of December, investor holdings in the by Goldessential monitored (pure-play) gold-backed exchange-traded funds were seen increasing 0.89 tonnes (+28,646 ounces) or 0.05 pct in the week from December 25th up to and including December 31st, in-house calculations based on official data showed on Saturday.
Two of the twelve monitored ETF’s announced an inflow over the reported period, whereas four reported a physical outflow. Six reported “no change”. Additionally, holdings in the Swiss ZKB Physical Gold ETF dropped by 8,973 ounces 0.28 tonnes (-0.19 pct) in the week up to December 24th, data released on December 29th showed.
Considering the ETF’s under our standard scope of analysis – hence excluding the infrequently updated ZKB -, we note that the largest inflow in both absolute numbers and percentages was seen in the by ETF Securities marketed ETFS Metal Securities (PHAU), where 56,804 ounces or 1.77 tonnes (+1.74 pct) were seen added to gold holdings on behalf of investors.
The world’s largest bullion-backed exchange-traded fund, the SPDR Gold Trust, reported holdings to have increased 29,398 ounces or 0.91 tonnes (+0.08 pct) over the reported period. Holdings in the COMEX IShares Gold Trust (Barclays) were dropping the most of all monitored trusts, at 29,419 ounces or 0.92 tonnes (-1.14 pct), followed by the South-African NewGold ETF, where 15,804 ounces or 0.49 tonnes (-0.92 pct) were removed.
Smaller redemptions were seen in the by ETF Securities marketed Gold Bullion Securities (GBS) and the Swiss based Julius Baer Physical Gold ETF, respectively at -9,989 ounces or 0.28 tonnes (-0.25 pct) and -2,344 ounces or 0.07 tonnes (-0.12 pct).
All other - non-discussed - monitored ETF’s reported no changes over the given interval. Jointly, the twelve monitored gold-backed exchange traded funds (excluding (1)) as such rose 0.05 pct over the reported period, adding to last week’s 0.49 pct advance.
Total monitored holdings (excluding (1)) were now at 1,646.48 tonnes, below a record high of 1,654.77 tonnes in the week to December 3rd. Grand total monitored holdings (including (1)) were at 1,792.23 tonnes, below a record high of 1,805.00 tonnes in the week to December 3rd.
On a rolling month (4-week) basis, the best performance (in percent) was seen in the Metal Securities Australia (+1.00 pct), followed by the equally by ETF Securities marketed ETFS Metal Securities (+0.81 pct). The third place was for the Canadian Claymore Bullion Trust (+0.42 pct). The Julius Baer Physical Gold ETF did the worst over the rolling month, with holdings down 5.40 pct, followed by the COMEX Ishares Gold Trust (-4.41 pct). The Gold Bullion Securities ETF stood third at –3.14 pct.
So, gold ETFs are the hottest investment properties these days. Investment in paper gold, as gold ETFs are called, is booming because people believe that the yellow metal these days has more value than currencies like the US dollar.
While many of you have heard of gold ETFs, not many of us know how to put in money in paper gold and what will be the returns that we would be getting from such exchange traded funds.
Gold and gold-focused exchange traded funds (ETFs) are a hot topic of late, and global commodities guru Jim Rogers is on board as a gold investor. But can Average Joes be successful investing in gold using Rogers’ method?
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