Thanks to the steadfastness of the World Gold Council, you are never at a loss for how many tons of gold are in demand each year in all of the important gold categories. Just last week, the World Gold Council released its most current data on gold-backed Exchange Traded Funds.
The hottest news is that this gold category ended year 2018 over $100 billion total for the first time since last crisis year 2012. Gold ETF’s purchased an additional 69 tons of the yellow metal for 2018, increasing the category’s total holdings up to 2,440 tons with a value of $100.6 billion. This was a major milestone that will have profound impacts on the future prices of gold.
It should not come as a huge surprise that European-based buyers and funds pushed gold growth in 2018. The World Gold Council reports that European headquartered funds added in another 96.8 tons of gold for the year. This represented an impressive 10 percent increase.
Somewhat surprisingly, Germany was the leading country adding gold to ETF’s for the year, with $2.6 billion in new gold added. For the past 10 years, German gold investment demand has boomed. With Germany looking like it is on the verge of a recession, the gold buying trend should continue in the nation for the foreseeable future.
Less surprisingly, United Kingdom investment funds poured in around $1.7 billion more in new gold for 2018. Brexit has pushed gold demand as concerns over the lack of a palatable EU exit deal worried investors and individuals throughout the country and continent alike.
Earlier in the year, the North American funds were fairly large liquidators of the yellow metal. With the rising wild volatility in the second half of the year, the outflows evolved into inflows again. For just December, the North American funds pumped in a full 36.3 tons in gold. The annual total finished with a net decrease of 13.4 tons.
Asian funds witnessed small net outflows for year 2018. Around 4.7 tons of the yellow metal were sold in Asia, per the World Gold Council. It was mostly profit taking that pushed the gold sales. Weakening emerging currencies dropped by from 10 to 20 percent, helping to increase interest in gold in these nations.
Yet December proved to be a wildly enthusiastic gold inflow month with an impressive 76 tons in the yellow metal (amounting to over $3.1 billion in value) being purchased by the gold ETF’s for that month alone. This was also a trending feature as the third month consecutively in which net gold inflows existed.
Despite the gains in gold holdings for the year, the World Gold Council reported that gold prices were basically flat for the full year, with a modest decline of 1.1 percent. The lows in August were overcome as gold shone for its safe haven nature during the tumultuous fourth quarter, as global markets like the S&P 500 crashed an eye-watering 14 percent for this same time frame.
For the first time since before 2012, gold outdid the S&P 500 (and all other major market indices around the world for that matter) in year 2018. It was a stark departure from the three years in a row of gold ETF funds outflows from 2013 to 2015.
Is Your Retirement Portfolio Prepared for the Return of Gold As An Increasingly Important Investment Asset Class?
The fortunes of gold may rise and fall from one year to the next. One things that remains constant over time is that it always serves its primary purpose most effectively as the world’s greatest and most dependable safe haven asset of all time. You can literally take physical gold to the bank (which may or may not survive the next severe Global Financial Crisis in any case). Never forget that gold is a unique asset class (everywhere in the globe) that offers sensible investors like you more than three thousand years of consistent value-hedging properties. In times like those we see today around the world and its unstable geopolitics, it takes a fool to overlook (or worse ignore) its famed capital-preserving powers.
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