Physical gold has seen a 240 percent increase in assets in the past seven weeks as a result of significant interest in gold and increased knowledge about commodities investing. The increased interest in gold Exchange Traded Commodities (ETCs) has been caused by the recent financial market turbulence.
Since their listing on the London Stock Exchange in April 2007, these precious metal ETCs have been listed on four other major European stock exchanges: Deutsche Boerse, Euronext Amsterdam, Euronext Paris and Borsa Italiana.
All of the physical precious metal ETCs are backed by allocated metal; the gold bars are held in trusting London by the Custodian HSBC Bank USA N.A., who is the world’s leading Custodian of ETCs with over $16 billion of precious metals being held for such products.
The management of Exchange Traded Funds (ETFs) Securities created the world’s first Exchange Traded Commodity (ETC) in 2003. Similar to Exchange Traded Funds (ETFs), ETCs are open-ended securities which can be created or redeemed by Authorised Participants or market makers.
“Many independent studies have shown that gold and precious metals have low to negative correlation with equities and importantly, in times of stress, this low correlation is shown to hold. Given the current financial market uncertainty, we have seen strong inflows into physically backed gold ETCs as investors have sought the benefits of gold’s safe haven characteristics,” says Nik Bienkowski, head of listing and research at ETF Securities.