The Most Interesting New Gold ETF Since GLD

February 16, 2017

As well as the stock market has been performing recently, many investors are hedging their bets. That's based on flows into physically backed gold ETFs, which ticked into positive territory last week for the first time in 2017.

Year-to-date, the two largest ETFs in the category―the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU)―now have combined inflows of nearly $1 billion. That comes on top of the more than $9 billion worth of inflows the duo saw last year.

 

Fund Flows Data

Ticker Fund Net Flows ($M)
IAU iShares Gold Trust 198.38
GLD SPDR Gold Trust 787.21

Source: ETF.com Fund Flows tool, powered by FactSet

 

Despite these sizable flows, gold prices haven't seen the bump one might expect. Though they've risen last year and so far this year, the yellow metal is still down 36% from its all-time highs set in 2011.

There's a few reasons for this, but one of the biggest is the U.S. dollar, which is close to a 14-year high. A "rule of thumb" for gold that often rings true is that a rising greenback is bearish for the yellow metal.

That poses a conundrum for U.S. investors. On the one hand they may be eager to use gold as a hedge against all manner of concerns. On the other hand, the greenback is in a secular uptrend that's quashing any attempts by gold prices to rally.

 

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