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Visual Capitalist: Investors buy gold ETFs at record pace

February had $7.9 billion in gold ETF inflows—and the miners aren’t doing too bad either

by Jeff Desjardins | posted with permission of Visual Capitalist | March 4, 2016

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The Chart of the Week is a Friday feature from Visual Capitalist.


What were the three most popular investments over the last month? If we’re judging by ETF inflows, the three areas that investors piled into were precious metals, government bonds and low-volatility equities.

Notably, it was gold ETFs that set a new record with their highest monthly inflows in eight years, as investors bought $7.8 billion of securities in February. This is according to the latest from market data company Markit, which also noted that inflows relative to assets under management (AUM) were equally impressive.

More specifically, last month’s buying represented an increase of 14.6% in terms of AUM. This is a level only surpassed once before during the heat of the financial crisis, when inflows relative to AUM hit 17.7% in February 2009.

Miners get some love

Gold mining companies have also received some appreciation so far in 2016, with the Gold Miners (GDX) and Junior Gold Miners (GDXJ) benchmarks up 40.7% and 38.2% respectively YTD.

Despite outperforming gold so far on the year, the GDX hasn’t seen the same kind of inflows as the physical commodity. In fact, February saw $25 million of net outflows to the gold mining ETF.

This phenomenon isn’t uncommon in the gold sector, as the performance of the metal and the return on miners isn’t always congruent.

Here’s the latest GDX/Gold ratio, which essentially tracks the price of the major gold miners relative to the metal itself:

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If the gold rally continues, there will be no shortage of opportunity for mining stock speculators. That’s why we gave you three reasons to consider gold in 2016 last month.

Posted with permission of Visual Capitalist.

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