Monday, May 16, 2016

Investors jump on gold price pullback as ETF's climb by 25% in past two weeks

While The Daily Economist has never advocated owning paper gold as either an investment or insurance, just the fact that more and more Americans are waking up to the understanding and need for gold in any capacity is a good thing.

And while gold bugs have seen the need for patience over the past month following the cartel's crushing of the gold price once it crossed over $1300 per ounce, this short term pullback has not scared away buyers as interest in the gold ETF's have skyrocketed over the past two weeks, and have increased by 25% in that same time.

Live New York Gold Chart [Kitco Inc.]
The great gold rush of 2016 is gathering pace. Holdings in exchange-traded funds have now surged by a quarter, with investors taking advantage of lower prices over the past two weeks to enlarge stakes on rising concern about central bank policy making worldwide. 
The holdings have increased to 1,822.3 metric tons, the most since December 2013, according to data compiled by Bloomberg, after bottoming at a seven-year low in January. In the past two weeks, as prices lost 1.6 percent, ETFs swelled 63.2 tons, rising every day. 
Gold is the best-performing major metal this year after silver amid rising concern over negative rates in Europe and Japan and whether the Federal Reserve will be able to tighten further. Demand jumped to the second-highest level ever in the first quarter, according to the World Gold Council, and billionaire hedge fund manager Paul Singer has said gold’s rally may just be beginning. Investors are being driven to gold on a structural shift in investment demand, according to Bernard Aw, a strategist at IG Asia Pte. - Bloomberg
In fact, not only has the likes of J.P. Morgan and billionaire hedge fund managers publicly called the new Bull Market for gold, but the moves since January have occurred with little more than 1% of Americans actually owning the precious metal.


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