Gold ETFs: More Popular Than Ever

by on August 27, 2009 | ETFs Mentioned:

As equity markets continue to surge and developed economies around the world begin showing signs of stability, many thought that huge inflows into gold ETFs that have occurred over the last year would begin to reverse.

Think again.

ETF Securities, the London-based ETF giant that recently broke through into the U.S. market, saw the largest ever one day inflow into its physical gold ETC on Wednesday, as fund holdings jumped by about 7%, or more than 200,000 ounces. With current prices hovering just below $950 per ounce, the day’s haul amounts to about $190 million. According to Reuters, the Gold fund’s holdings have jumped by about 18% in the last week.

Despite the recent rally on Wall Street, many gold ETFs have held their ground, perhaps propped up by uncertainty on the staying power of the recent mini bull market and worries that many developed economies will experience significant inflation in coming months as the hangover from the massive economic stimulus plans implemented to stave off a deeper and more prolonged recession.

U.S.-listed ETFs have enjoyed strong gains over the last 12 months:

Ticker ETF 1 Year Return
GLD SPDR Gold Trust 14.1%
IAU iShares COMEX Gold Trust 14.1%
DGL PowerShares DB Gold Fund 11.1%

Disclosure: No positions at time of writing.