GLD Finally Breaks 6-Month Outflow Streak

ETF.com

For the first time in six months, physically backed gold ETF GLD has registered weekly inflows, marking the end of a spiral in assets that has pressured prices for the yellow metal.

Year-to-date, GLD has sloughed off $20.45 billion of its assets. That’s almost 30 percent shrinkage compared with the $72 billion the fund ended 2012 with.

Here’s some perspective on that loss:GLD is not only the biggest asset loser so far in 2013, it’s leading the second-place loser, the iShares MSCI Emerging Markets ETF (EEM), which has shed $7.72 billion year-to-date, by almost $13 billion.

GLD’s performance has led to the continued flow of investment capital out of the fund.

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YTD TRR GLD

It’s not pretty, but it’s not a death sentence. The performance of GLD has slumped some 20.49 percent so far in 2013, and that stings. However, around the end of June, things started to move back toward positive ground for GLD, which, of course, mirrors the price-recovery path for gold itself.

On top of that somewhat-steady upward movement in GLD’s performance, the fund has been snagging assets recently, pulling in $76 million on Friday, Aug. 9, and adding $90 million on Wednesday, Aug. 14, totaling $166 million in positive flows during a five-day trading period and landing in the HardAssetsInvestor.com top inflows for commodity ETFs this week.

That $166 million might be pocket change for washed-up fund royalty like GLD, but even the king has bootstraps, and this just might be GLD’s way of pulling itself up by them.

Those inflows are even more impressive when you consider that the week ending Thursday, Feb. 7 was the last week during which GLD saw positive flows, gaining $96.88 million over that five-day trading period.

Since Feb. 7, it’s been all downhill for GLD. The fund didn’t just lose assets, though; it made a sport of it. Not only has it shed AUM every consecutive week since the beginning of February, GLD’s been among the top 10 redemptions—often being the biggest loser—every week since then, with the exception of a two-week period in mid-June when prices edged above $1,400 per troy ounce.

Gold bullion prices have recently inched back toward the “battle-ground” price near $1,350 per troy ounce, which could be a slow move back toward a solid base.

Sumit Roy, managing editor of HardAssetsInvestor.com, posits that that basing process will be a long, drawn-out affair .

“It will likely take months before gold forms a sustainable bottom that prices can rally off of. Thus, current price action is good news, but don’t get carried away with optimism,” Roy said.

 

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