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Gold ETF Assets Plunge as Soros Dumps GLD Holdings


Nearly 180 metric tons of bullion flowed out of gold ETFs in the first quarter as notable investors including George Soros dumped their positions in SPDR Gold Shares (GLD) and other precious metal funds amid a pullback in prices.

The first quarter saw a “strong resurgence” in demand for gold jewellery, bars and coins; however, overall demand was down 13%, according to a report released Thursday from the World Gold Council.

“Outfows from ETFs accounted for the vast bulk of this decline; excluding these outflows overall demand grew year-on-year,” it said.

Also, SEC filings Wednesday revealed that Soros Fund Management LLC lowered its investment in GLD, the largest gold ETF, by 12% in the first quarter to 530,900 shares, Bloomberg reports.

The correction in gold prices has erased $42 billion in value from gold exchange traded products, according to the report. Assets in GLD have dropped 22%.

In terms of performance, GLD was down about 17% year to date through Wednesday’s close. Other gold ETFs include iShares Gold Trust (IAU) and ETFS Physical Swiss Gold Shares (SGOL).

Deutsche Bank analysts predict that gold ETFs could shed an additional 250 metric tons of bullion due to investor redemptions. [Gold ETFs Set for More Outflows]

Gold held by bullion-backed ETFs, which in 2012 accounted for 6% of the world’s gold demand, fell by 177 metric tons in the first quarter, according to the World Gold Council.

Gold-backed ETFs  “have seen some holders, primarily in the U.S., collect profits and move into equities,” said Marcus Grubb, a managing director at the WGC. While gold ETF holdings are down, this has been balanced by investment in bars in coins, which increased 10% in the first quarter from the year-ago period, he added.

“We’re still seeing ETF liquidation. It’s driving prices down,” said Jim Steel at HSBC in a Financial Times story. Gold futures were trading below $1,400 an ounce on Thursday.

SPDR Gold Shares


Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.