Physical gold ETC became one of most liquid ETFs/ETCs in Europe, trading $14.5 billion in 2008. Gold’s dominant position as a liquid safe haven asset significantly increased ETC volume and asset growth of ETF Securities Limited.
ETF Securities has seen total Assets Under Management (AUM) in its physical gold ETCs grow in the past year to $4.8 billion, up $1.75 billion, 55% increase. Gold’s low to negative correlation with equities helped it to dominate 2008 performance tables, with a 4% increase in USD and 44% increase in GBP.
ETFS Physical Gold (PHAU) grew by $1.2 billion and Gold Bullion Securities (GBS) grew by $550 million during 2008. The 55% increase in physical gold ETC assets compares to a 5% fall in overall European ETF assets in 2008.
Both physical gold ETCs, ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS) are also in the top three ETFs / ETCs traded on the London Stock Exchange (LSE). Combined, they traded $14.5 billion in 2008 across five European exchanges, trading an average of $58 million per day. This was up 230% from 2007 when they traded $4.3 billion.
Enabling physical gold ETCs to be so liquid is the fact that the underlying, LBMA physical Good Delivery bars trade around $6 billion per day, making gold more liquid than any equity on the planet. Globally, physical gold ETCs have now accumulated $30 billion in assets and trade up to $1 billion per day. In Europe, ETF Securities’ physical gold ETCs are listed on five exchanges and traded in three currencies.
“ETCs are as liquid as the underlying market, they are transparent with detailed disclosure and with many ETCs being collaterlised, they are also secure,” says Nik Bienkowski, chief operating officer, ETF Securities.
“It is therefore not surprising that our physical gold ETCs have grown to approximately $5 billion in assets, with AUM up 55% and volumes up 230% in 2008. More recently, investors have been pouring into long ETCs tracking oil such as ETFS Crude Oil and ETFS Brent which have seen inflows of $600 million in nine weeks.”
“With financial instability high, counterparty risk a serious issue, governments boosting money supply at an unprecedented rate, and government debt levels expected to grow rapidly over the next few years, there are good reasons for conservative investors and the general public to want to hold a portion of their assets in gold,” says Nicholas Brooks, head of Research and Investment Strategy, ETF Securities.
“Gold’s price performance and demand last year certainly fits this trend with gold one of the best performing assets in 2008 and also over five and ten years. Last year, gold was up 4% in USD and 44% in GBP.”
L.D.