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Gold ETFs See Biggest Monthly Outflow in Over Two Years


Gold ETFs are down about 3% so far in February and bullion holdings in the precious metal funds are set for their biggest monthly pullback since January 2011, according to a report Tuesday.

Holdings in gold exchange traded products have declined 2.9% this month to about 2,536 metric tons after hitting a record in December, Bloomberg News reports.

“The turn in the gold cycle has likely already started,” Goldman Sachs analysts said in the report. “The latest collapse in gold ETF holdings stands in sharp contrast to our assumption that ETF positions were likely driven by longer-term allocation rather than short-term trading.”

SPDR Gold Shares (GLD) is the largest precious metal ETF with nearly 1,273 metric tons of gold and $65 billion of assets under management. Billionaire investor George Soros pared his stake in the gold ETF in the fourth quarter, according to regulatory filings. [Gold ETFs Fall as Soros Scales Back GLD Investment]

Year to date, GLD has experienced net outflows of $4 billion, according to IndexUniverse. [Gold ETF Outflows]

“What people are concerned about is that the physical ETFs are a major threat in a way, in that if people become convinced that the bull run is unwinding, you may start to see (those inflows) moving in the opposite direction,” Standard Chartered analyst Daniel Smith said in a recent Reuters story. “That can create a vicious circle of selling, and lower prices, and selling. People are watching that very closely.” [Could Gold ETF Outflows Drive ‘Vicious Circle of Selling?’]

Gold ETFs have been stuck in a downtrend the past few months but rose more than 1% on Tuesday and are up the past four trading sessions. [Gold ETFs Rebound as Prices Test $1,600]

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.