Mark Fairbanks, Foreside

ETF Express newsletter 18.03.22

The fallout from the tragic situation in the Ukraine has pushed up precious metal prices, particularly gold, that traditional safe haven commodity in troubled times.

Abrdn’s Robert Minter predicted a rise in the gold price when interviewed a few weeks ago for our piece this week. Minter had history on his side, quoting Abrdn research which has found that in five rate hikes from 1971 to 2006, the price of gold rose through them all.

“These are not all perfect analogies for today, but it does show that the gold price can rise when interest rates rise,” he says. Other evidence lies in HANetf’s news this week that its Royal Mint Gold ETC has risen 73.4 per cent year to date.

WisdomTree’s Chris Gannatti wasn’t specifically looking at gold, but at metals generally, noting that the sustainable world has a huge need for metals. Gannatti says that a typical electric car requires six times the mineral inputs of a conventional car, and a typical onshore wind plant requires nine times more mineral resources than a gas-fired power plant. 

Since 2010, the average amount of minerals needed for a new unit of power generation capacity has increased by 50 per cent as the share of renewables has risen, Gannatti says, noting that it’s possible that by 2040, lithium will see its demand growing by about 40 times, whereas graphic, cobalt and nickel could see demand grow by 20-25 times. 

It’s that time of year for the big survey and Brown Brothers Harriman’s investor survey published this week did not disappoint. “2021 was a year of record growth, and 2022 looks set to follow suit as investors demonstrate their confidence in ETFs and increase their allocation across multiple strategies,” says Shawn McNinch, Global Head of ETF Services at BBH. “With allocations rising across active, thematic and ESG strategies globally, it’s evident that the depth of choice in the market continues to provide new portfolio opportunities for investors of all types.”

Outstanding facts from the survey include that fact that 84 per cent of global investors plan to increase allocations to ETFs in the next year, and that one that we put in the headline: Every USD3 invested in ETFs last year saw just USD1 go into mutual funds.

Beverly Chandler, managing editor, ETF Express

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Companies in this issue

BNP Paribas
Brown Brothers Harriman
Harbor Capital Advisers


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