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Gold, silver funds see biggest weekly outflows in three months

Published 16/02/2021, 07:12
Updated 16/02/2021, 07:15
© Reuters. FILE PHOTO: Granules of 99.99 percent pure gold and silver are seen in glass jars at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk

(Reuters) - Gold and silver mutual funds and ETFs witnessed the biggest outflows in three months in the week ended Feb. 10 as investors put their money into soaring equities and high-yielding bond markets.

Investors net sold $1.4 billion in precious metal funds in the week ended Feb. 10, according to weekly data available for 338 precious metal funds on Refinitiv Lipper.

(Graphic: Flows into precious metal funds, https://fingfx.thomsonreuters.com/gfx/mkt/ygdvzedmmpw/flows%20into%20funds.jpg)

On the other hand, investors put $43.1 billion in equities funds, as global stocks surged on optimism over vaccine roll-outs and hopes of a bigger fiscal package from the United States.

iShares Silver Trust (NYSE:SLV) saw outflows of $919.1 million, while SPDR Gold Shares (NYSE:GLD) had net sales of $621 million in the last week.

The outflows from precious metal funds also came as the U.S. Treasury yields hit an over 6-month high, on hopes large stimulus measures from the United States would accelerate the country's economic growth.

(Graphic: Biggest outflows in the week ended Feb. 10, https://fingfx.thomsonreuters.com/gfx/mkt/gjnvwzxajpw/precious%20metal%20funds.jpg)

The data showed global bonds also had inflows of $18.03 billion in the week ended Feb. 10.

"'Gold-as-a-safe-haven' isn't incredibly appealing for investors during an incredible economic recovery," said TD Commodities in a report.

It also said gold remains negatively correlated to 5-year/5-year forward inflation swaps, reflecting gold's less attractive investment profile as nominal yields rise.

(Graphic: Correlation between forward inflation swap and gold prices, https://fingfx.thomsonreuters.com/gfx/mkt/azgpoeknjpd/correlation.jpg)

On the other hand, investors have been piling into some platinum ETFs in the past few weeks, the data showed.

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GraniteShares Platinum Trust had an inflow of $4.6 million in the week ended Feb. 10.

Platinum prices soared to their highest in nearly 6-1/2 years on Tuesday, fuelled by expectations a rebound in the global economy would stoke demand for the metal used in autocatalysts.

Latest comments

"(NYSE:GLD) had net sales of $621 million" Reuters staff, you seem familiar with this particular gold fund. I've spent quite a bit of time doing my due diligence into GLD. Would you happen to know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? The GLD managing organizations sure went out of their way to create this glaring audit loophole. What is the purpose of this loophole? Additionally, the GLD organizations promise that this fund is 100% backed by actual physical gold but yet they staunchly deny retail investors the right to any of their listed physical gold.  CNBC's Bob Pisani visited GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities.
Even on the subject of GLD's insurance, they are not at all straightforward about it. Their representatives will not confirm nor deny the existence of GLD's insurance. I recommend anyone curious about this to confirm via calling GLD's publicly listed number for general inquiries at 866 320 4053 and ask about this clause from the GLD prospectus: "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." Exactly how much of the fund is insured? They will not give you a straight answer and might even throw in some bizarre excuse which I've experienced. Why hide this information from investors? The people behind GLD certainly do not seem like the most honest types.
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