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Gold Bullion Market and ETFs

June 21, 2010 - The market for gold bullion is becoming insatiable as gold prices continue to set record highs. Thursday, June 17, the most recently reported day, saw the popular exchange-traded-fund (ETF) SPDR Gold Shares add almost two tons, for a total holding of 1307.96 tons. Even in India, where gold was actually down on the day, ETF shares continued to rise. Physical gold-backed trusts all over the world are buying or have recently made major gold purchases, including the Central Gold Trust of Canada, Sprott Physical Gold Trust and the SPDR Gold Trust.

Some governments are getting in on the buying — according to the World Gold Council, the most active central bank buyers in the last quarter were the Philippines and Russia, while China, India and Brazil remain active players. European and U.S. central banks, however, are content to sit on the sidelines for now, with the exception of the International Monetary Fund (IMF). The IMF has sold 38.7 tons of gold bullion since February of this year, a relatively small amount. In contrast, the SPDR Gold Trust has purchased 162 tons in the same period.

To fill the insatiable demands of the ETFs, the world’s gold mines have kicked into overdrive. For instance, Gold-Ore of Canada announced that a mine in Sweden produced 11,427 ounces of gold in the first quarter of 2010, a record amount, and a 41 percent increase over the same period one year ago. Friday’s new record price for gold caused a spike in gold mining stocks, which rose significantly on all U.S. indices . Mining stocks have lagged behind the gold bullion market, but may be on the verge of catching up. After all, the ETFs have to get that gold somewhere, don’t they?

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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