Source has reported that its Source Physical Gold ETP (LON: SGLD) has recorded over $500m of net new assets year to date (5 April), as the gold price has risen 9% during the same period. According to the ETF issuer, the figures show investors are returning “aggressively” to gold.
Gold ETPs represent an attractive safe-haven trade to position against current geopolitical uncertainty, according to Source.
Chris Mellor, executive director, product management at Source, said: “While the risk-on move in markets in November and December coincided with gold outflows, investors have come back in aggressively in 2017. As geopolitical risks continue to worry politicians and investors alike, we fully expect gold flows to continue.”
SGLD has seen over $2 billion inflows since the start of 2016 on the back of rising political uncertainty surrounding events such as Brexit and the US Presidential election. This year also sees upcoming elections in France and Germany that investors will be watching closely for their potentially market-destabilising effects.
Analysts have noted that US airstrikes in Syria (resulting in escalating tensions between the US and Russia over president Putin’s continued support of the Assad regime) has caused the gold price to reach post-Trump highs, and further developments in this space will likely continue to affect demand. In addition, a weaker than expected US employment report on 7 April led to a fall in US treasury yields in a risk-off play that is also supportive of gold.
Mellor continued, “The US recovery doesn’t look as solid as it did, US equity valuations are getting extended and geopolitical risks, including North Korea, China, Russia and protectionism to name a few, are on the rise.”
Source Physical Gold provides the performance of the spot gold price through certificates collateralised with gold bullion. The ETP has a fixed fee of 0.29% and assets under management of over $4bn
ETF Securities also reported strong flows into gold, with its gold ETPs seeing a combined $42m of inflows in the week beginning 3 April. The largest of these is ETFS Physical Gold (LON: PHAU) which has AUM of $5.9bn and fees of 0.39%.