dChan
Anonymous ID: 5c70b5 May 22, 2020, 6:53 a.m. No.9275843   🗄️.is đź”—kun

A Gold Vault in London Is Key to a $62 Billion ETF’s Success

 

Gold-backed ETFs are on pace for a record haul in a year that’s seen some funds tracking oil futures founder.

 

Investors have poured unprecedented amounts of cash into gold funds, with inflows totaling $16.8 billion in less than five months and set for a record year, according to data compiled by Bloomberg. State Street’s $62 billion SPDR Gold Shares, ticker GLD, has taken in nearly $12 billion in 2020, ranking it third for worldwide ETF inflows behind two equity-focused funds.

 

Gold funds are drawing a surge in interest partly because they’re backed by actual bars of the precious metal, making them better able to track the underlying assets’ spot price when markets go haywire. Compare that with the futures-backed United States Oil Fund, or USO, which was forced to take a series of unusual steps to survive amid a plunge in the crude contracts. WisdomTree suspended a swaps-based inverse oil offering in April, while Proshares Capital Markets liquidated two leveraged crude ETFs a month earlier. State Street’s gold is stored in a vault in London accredited by the London Bullion Market Association and three registered security carriers. The $63 billion stockpile takes up just one corner of a vault in an system that stores bullion on behalf of central banks, sovereign wealth funds, and other institutions, Milling-Stanley said.

Sure it does…pics or it didn't habben…been lying about this for decades.

 

Contrast that to USO, which was revealed to be far from a straight-forward bet on the direction of oil prices. After years of tracking the front-month oil contract, the fund repeatedly rolled forward its holdings to longer-dated futures and warned it may see “significant tracking deviations” to its benchmark. Its issuer has said it’s unclear if USO will ever be able to return to tracking the front-month contract.

 

The episode raised questions about how much of the oil futures market USO controls and its ability to impact prices. At different stages, the fund held about a fifth to a quarter of the May and June contracts. USO said on Thursday that its currently unable to buy more oil futures following intervention from regulators in three countries.

 

“With the synthetic ETFs, there is more of a tracking difference between what the underlying is and what the ETF’s unit price is, so that’s where investors probably need to do a bit more due diligence and understand the risks involved,” said Kanish Chugh, co-head of sales at ETF Securities.

 

The United States Commodity Funds, which manages USO and other commodity ETFs, didn’t immediately respond to a request for comment.

 

Meanwhile, most gold ETFs are backed by the metal itself, instead of futures contracts, meaning the chance of a similar meltdown to USO is slim, Chugh said.

sure faggits-it's actually a worse situation and they all know it The physical spot price of gold would have to become negative.

'Ummmm no it wouldn't…all it needs is a loss of the CONfidence the masses have placed in this vehicle as you do not actually own a damn thing with any ETF-all you have is a paper promise to stand for delivery and you will be in a very long line

 

Although gold futures ETFs do exist, they’re much less popular than their physically-backed counterparts. For instance, Invesco DB Gold Fund has $154 million in assets. Inflows into gold funds are expected to continue this year amid worries about currency debasement due to unprecedented stimulus from the Federal Reserve. Others fear the stock rebound will fade as economic data shows the dire impact coronavirus shutdowns have had on the nation’s economy.

https://www.bnnbloomberg.ca/a-gold-vault-in-london-is-key-to-a-62-billion-etf-s-success-1.1439905

 

If you actually believe that they have all the metals and commodities that back the synthetic ETF market(s) I have a few things I'd like to sell you. The biggest player here is Blackrock with the iShares brand of ETF's