GLD Gold Reserves Fall To Near Seven-Year Lows In July
New York (Aug 3) The hardest hit among of gold ETPs was the world’s largest, SPRD Gold Shares (NYSE: GLD). According to data compiled by GLD, gold held in trust fell 38.74 tonnes to end July at 672.7 tonnes. The ETF’s gold reserves are at their lowest level since March 2008.
Not only are reserves near seven-year lows, but this was the worst month of investor ETF redemptions this year since December 2014, when GLD reserves fell by almost 45 tonnes.
Redemptions in the ETF market have picked up substantial momentum since a positive the start of the year, when reserves rose by 49.35 tonnes in January. However, investor flows are now considerably negative, down 69.54 tonnes on the year.
With so much negative sentiment in the marketplace, some analysts are not expecting to see a turnaround in the ETF market any time soon. Phillip Streible, senior market strategist at RJOFutures, said that he expects gold will continue to trend lower, which will force more investors out of the marketplace.
“Clients don’t want to be in products that are being crushed and destroyed,” he said. “I think we will continue to see redemptions until that first rate hike in September.”
Streible, explained that the Fed’s first rate hike after the summer could end up spooking investors in equity markets and they might turn to gold and GLD to diversify their portfolio again.
In a research note published Monday, Barclays said that the only good news for the ETF market is that outflows slowed modestly in the last few days of the month. However, they also expect selling momentum to pick up, forecasting the third quarter will mark gold’s weakest point this year.
“We expect another wave of ETP selling if gold breaks $1000/oz, with a large chunk of early investors becoming loss-making,” they said.
While gold has seen mass investor redemeptions, there is som hope in the precious metals markets; silver has been able to attract some investors, but still not enough to outpace the sellers.
"While gold ETFs declined by 4% in July, silver counterparts were more or less flat versus levels at the end of June," said analysts at UBS.
Source: KitcoNews
