Gold ETFs close H1 with record US$40 billion of net inflows

1 kg Royal Canadian Mint Gold Bars

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For its June 2020 highlights, the World Gold Council reported that gold-backed ETFs recorded their seventh consecutive month of positive flows, adding 104 tonnes in June – equivalent to US$5.6 billion or 2.7% of assets under management.

This brings the first half of 2020 global net inflows to 734 tonnes (US$39.5bn), significantly above the highest level of annual inflows, both in tonnage terms (646 tonnes in 2009) and US-dollar value (US$23bn in 2016).

To put this strength of demand into context, H1 inflows are also significantly higher than the multi-decade record level of central bank net purchases seen in 2018 and 2019, and could absorb a comparable amount of about 45% of global gold production in H1 2020.

Gold is up about US$100/oz since early May and now almost US$1,800/oz, the highest in nine years. This is attributed to massive “printing” of dollars in the Quantitative Easing program that devalues the dollar in relation to gold, the unsustainable U.S. debt and gold’s safe haven status.

Gold’s rise in value has also had a positive effect on gold stocks which have risen 23% in 2020 as measured by the NYSE Arca Gold Miners Index.

Senior gold producers such as Barrick Gold, Kinross Gold, and Newmont have seen 40% rises in their share value. Shares of mid-tier producers such as Alamos Gold have more than doubled since March. Today (July 7), Alamos shares were up $0.69 to $13.85.

Shares in Lundin Gold have almost doubled and were up $0.28 today to $12.86.

Not to be left out, shares in silver miners have also been rising. For example, shares of Endeavour Silver, Fortuna Silver and Hecla Mining have all seen substantial gains.  In a spectacular move, shares of Pan American Silver have risen from about $17 in mid-March to reach $40.72 – up $0.81 today.

Select junior explorers have also done well since March. Trading at about $0.60 in mid-March, shares of Skeena Resources reached $2.46 today. Another Golden Triangle stock – Scottie Resources – has seen its share price triple since mid-March.

Numerous analysts have predicted that precious metal prices will keep on rising, making for a continuation of the bull market in related stocks.


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