Exchange-traded fund investors are falling out of love with gold bullion.
They ditched a total of 232 metric tonnes of metal from exchange-traded funds, such as the SPDR Gold Shares, in the five months through October, according to new data from industry group World Gold Council, which tracks the information.
That’s worth a staggering $14.7 billion dollars. That’s based in the recent price of $1,973, per troy ounce, according to Bullion Vault. There are 32,150.7 troy ounces in a metric ton.
In October the biggest sellers of bullion ETFs were based in North America, dumping $1.6 billion of holdings in the yellow metal. Europe ditched $622 million and the remainder of the world purchased $138 million of gold ETF investments.
The western craze in dumping gold comes hadn’t in glove with growing geopolitical tensions notably:
- The ongoing war between Russia and Ukraine, now almost two years old.
- The October 7 Hamas terrorist attack on Israel and the efforts of the Israel Defense Force to crack down on that and other militias including Hezbollah, Islamic Jihad, and Houthis.
- The tensions between Beijing and Washington D.C. over the sovereignty of Taiwan.
- Plus there is concern over the ballooning debt levels in the U.S.
Right now none of those things seem to be worrying gold investors enough to buy more of the yellow metal.
Part of that phenomenon may be due to the fact that gold prices have recently rebounded somewhat. The SPDR Gold Shares exchange-traded fund, which holds bars of solid bullion, has gained 4.5% over the latest three months, according to data from Yahoo Finance.
For some investors, the dollar value of their bullion holdings is more important than the volume of measured in metrics tons. That means that when gold prices go up the precious metals portion of portfolio increases.
Still, the worries about war and rising debt levels are apparently being placed on the back burner as investors look forward to lower interest rates and the likely resulting surge in the stock market.
However, the question should be whether the U.S. will finally dip into a recession in 2024. There have been forecasts of an imminent recession since mid 2022 and so far non have arrived, as I have highlighted multiple times over the last year and-a-half.
There are starting to be reasons to be genuinely concerned about a potential slowdown and possible recession early next year.
Not least of the worries comes from the Federal Reserve. The central bank’s policy makers have a terrible record of over shooting their efforts to contain inflation and with banal regularity tend to push the economy into a contraction. Whether that happens remains to be seem. But we already know that the chairman, Jerome Powell, wants to ge a reputation for being tough on inflation, and that will likely have led to harsher policies than absolutely necessary to contain the price level of goods and service.
In the meantime, gold experts suggest holding a portion of your portfolio in gold as an insurance against a potentially volatile stock market.