It's been a spectacular year for gold so far. The yellow metal had its best quarterly performance in 30 years in the quarter ending Thursday, surprising the investing community across the board. Prices rose by 16.1% in the quarter to end at $1,232.71 after starting the year near the lowest levels since 2009.
But that wasn't the only milestone for gold. An exchange-traded fund that tracks the metal captured the most investor dollars of any ETF so far in 2016. The SPDR Gold Trust (GLD | A-100) had inflows of $6.8 billion through the first three months of the year, according to FactSet. The second-largest gold ETF, the iShares Gold Trust (IAU | B-100), also had an impressive haul: $1.2 billion.
Investors Push Gold Up
In fact, the rise in gold prices and the inflows into gold exchange-traded funds may go hand in hand. Gold ETFs bought up a whopping 9.7 million troy ounces—or 300 metric tons—worth of bullion in the first quarter.
Gold ETF Holdings
To put that in perspective, that's the equivalent of 27% of total global gold demand in the fourth quarter.
The sudden surge of investor interest in gold paralleled the big swoon in stock prices in January and February. But though the stock market has rebounded since then, gold has impressively held on to most of its gains.
Negative interest rates around the world, an expanded quantitative easing program from the European Central Bank, and promises by the Fed to move only gradually when hiking rates may all be serving to keep a bid under gold prices.
Miners: Top-Performing ETFs
Yet as well as gold prices themselves have done this year, the biggest winners have been the miners. Indeed, mining exchange-traded funds were the best-performing of all ETFs in Q1.
At the No. 1 spot was the Direxion Daily Gold Miners Bull 3x (NUGT), which surged an eye-popping 141% in the period.
But even outside leveraged ETFs, the gains were enormous. The PureFunds ISE Junior Silver ETF (SILJ | F-61) was the best nonleveraged fund, with a return of 71.6%.
Following suit was the iShares Global Gold Miners ETF (RING | B-99), with a gain of 56.2%, and the Sprott Junior Gold Miners ETF (SGDJ), with a gain of 49.4%.
All together, almost a dozen gold mining ETFs were clustered in the 40-50% return range, including the largest of the bunch, the Market Vectors Gold Miners ETF (GDX | C-74), with its 45.6% advance.
Q1 Returns For GLD, NUGT, SILJ, RING, SGDJ, GDX
Bulls hope that after years of declines, the battered mining sector may be finally turning the corner.
That will likely come down to whether gold prices can maintain current or even higher prices―which itself may come down to whether the strong appetite for physically backed gold ETFs such as GLD and IAU continues.
Contact Sumit Roy at [email protected].