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Physically-backed gold ETCs see continued strong demand, says ETF Securities


Exchange-traded commodities provider ETF Securities says it has experienced large inflows into physically-backed gold and silver ETCs over the past week as investors sought safe haven asse

Exchange-traded commodities provider ETF Securities says it has experienced large inflows into physically-backed gold and silver ETCs over the past week as investors sought safe haven assets.

Physically-backed gold ETCs saw USD93m of net inflows, equivalent to 106,000 ounces of gold, in the six business days up to October 6, the largest weekly increase during the past 10 weeks, while silver also saw net inflows.

Amid reports of UK investors spreading bank deposits across a number of institutions to benefit from the increased GBP50,000 government guarantee, physically-backed gold ETCs have also benefited from the market’s increasing aversion to risk.

The ETCs are backed by allocated 400oz gold bars that carry no credit risk. The precious metal bars and ingots backing the ETCs are held in trust in London by custodian HSBC Bank USA.

Despite a fall in gold prices last week, the ETCs’ total assets reached USD4.5bn, equivalent to 5,340,000 ounces. So far this year the products have seen USD992m in inflows, equivalent to 1,530,000 ounces, an increase of 30 per cent.

ETFS Physical Silver experienced a net inflow over the six-day period of USD7m, an increase of 4 per cent or 1,194,729 ounces. Over the past six weeks, the product’s volume of silver has increased by 25 per cent to 12.8 million ounces, the highest level since January 30, and its total assets to USD141m.

‘We have seen robust demand for physically-backed gold ETCs in a time where many other asset classes are experiencing outflows,’ says ETF Securities chief operating officer Nik Bienkowski. ‘ETCs have lowered many of the barriers that previously prevented many investors from investing in the precious metals market, including access, trading and operational risks, and secure storage.

‘Unlike many other commodities, precious metals are durable, homogenous and easily stored, enabling ETCs to be backed by allocated physical bars which have transparent pricing and carry no credit risk.

‘In volatile times like these, gold comes into its own. It is used as a store of value and a safe haven. In addition, it has been shown to have no correlation with equities, thereby providing additional diversification benefits to investment portfolios.’

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