Commerzbank: distrust of 'money printing' fuels ETF gold inflows

New York (June 2)  Continued inflows into gold exchange-traded funds show that investors are not completely comfortable with an “unprecedented money-printing orgy” by central banks, said Commerzbank. Analysts noted that gold prices remain within striking distance of the metal’s highest level in more than seven years, which was hit this spring. Analyst Carsten Fritsch said the bank anticipates gold will return to its mid-May record high in euro terms. “After all, the €750 billion recovery fund proposed by the European Commission would lead to a dramatic increase in EU [European Union] debt levels even if the debt is not to be allocated to the individual member states,” Fritsch said. Further, he noted that the European Central Bank this week is likely this week to increase its Pandemic Emergency Purchase Program of bond buying. “The resulting increase in the ECB balance sheet is tantamount to diluting the value of the euro,” Fritsch said. “That said, the same applies to the USD [U.S. dollar], as the Fed is also expanding its balance sheet massively. The ongoing inflows into gold ETFs are evidence that investors distrust this unprecedented money-printing orgy by the two leading central banks.” The analyst pointed out that, based on Bloomberg data, Monday was the 27th consecutive day of ETF gold inflows, which is only one day less than the record streak from January and February.

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