Gold ETF Flows: November 2022

ETF holdings dwindle in November

Published:

Highlights

  • Global gold ETF net outflows slowed in November to 34t (US$1.8bn)
  • All regions registered outflows during the month, led by North America and Europe
  • This marked the seventh consecutive month of outflows; y-t-d net outflows total 83t (US$2.4bn)

Global gold ETFs registered their seventh consecutive month of net outflows in November. But outflows slowed to a relatively modest 34t (US$1.8bn), having also decelerated m-o-m in October (to -59t).1  Gold performed strongly in November, up 7% m-o-m,2  supported by falling yields and a weaker US dollar on mounting speculation that central banks around the world may begin to slow the pace of interest rate hikes.

On a y-t-d basis, global gold ETFs have now seen 83t (US$2.4bn) of net outflows, predominately from North American- and Asian-listed funds. Interestingly, European funds as a whole remain in net inflow territory y-t-d (19t), possibly reflecting greater safe haven demand given the weaker economic outlook for the region. At the end of November, total assets under management (AUM) stood at 3,477t (US$196bn).

November highlights

No region was spared from net outflows during the month, with the largest outflows coming from regions with the largest holdings and greatest liquidity. North American funds saw outflows of 21t (US$1.1bn), while European funds lost 11t (US$614.8mn). Once again, top US funds registered the biggest losses during the month, likely due to the sixth consecutive interest rate rise by the Fed. In Europe, UK (-6t) and German (-5t) funds were the main contributors to the regional decline in AUM, as ECB policymakers continue to signal further interest rate rises.

Net outflows in Asia were far more modest by comparison; the region lost 2t (US$92mn) from total AUM, driven primarily by China (-2t, -US$99mn). Local investors may have cashed their holdings amid the 4% RMB gold price gain during the month. But these outflows were partially offset by net inflows into Japanese funds (0.9t, US$48.8mn). Funds in other regions saw a minor outflow of 0.7t (US$37.1mn) during the month.3

Improvement in gold sentiment but conviction lacking
Gold daily trading volumes saw a significant m-o-m pick-up across all markets in November, rising 17% m-o-m to US$134bn. Gold exchange-traded derivatives volumes rose the most, up 37% m-o-m, followed by OTC (+6%) and gold ETFs (+3%). Data from the Commitment of Traders report (COT) shows that managed money positions swung back to net long during the month, owing to a combination of marginally improved sentiment and short covering as the gold price rose. At the end of November, net managed money position totalled 87t (US$21bn).4

 

ETF flows chart

Data as of

Sources: Bloomberg, Company Filings, ICE Benchmark Administration, World Gold Council; Disclaimer

Regional flows5

All regions saw outflows

  • North American funds saw outflows of 21t (US$1.1bn, 1%)
  • European holdings declined by 11t (US$614.8mn, 1%)
  • Asian funds lost 1.5t (US$92mn, 1.4%)
  • Other region fell by 0.7t (US$37.1mn, 1.1%) outflow

Individual flows (November)

SPDR® Gold Trust and iShares Gold Trust (US) as well as Xetra Gold (Germany) and Invesco Physical Gold ETC (UK) saw the largest outflows during the month

  • In North America, SPDR® Gold Trust saw the largest outflows, with holdings declining by 12t (-US$649.5mn, -1%), followed by iShares Gold Trust which lost 7t (-US$383.2mn, -2%)
  • In Europe, German-listed Xetra Gold shed 4t (-US$216mn, -2%), while UK funds Invesco Physical Gold ETC lost 3t (-US$143.4mn, 1%), WisdomTree Physical Gold (-2t, -US$114mn, -3%) and WisdomTree Physical Swiss Gold (-1t, -US$69.3mn, -3%) also registered notable outflows
  • In Asia, outflows were once again dominated by China: Bosera Gold Exchange Trade Open-End Fund ETF (-2t, -US$104.1mn, -12%) and E Fund Gold Tradable Open-end Securities Investment Fund (-1t, -US$57.5mn, -12%) saw the biggest declines.

Long-term trends

  • At the end of November, y-t-d net outflows stood at 83t (-US$2.4bn, -1%)
  • Flows from larger, liquid funds continued to move with the price of gold, while low-cost funds remained positive

Footnotes

  1. We calculate gold-backed ETF flows both in ounces/tonnes of gold and in US dollars because these two metrics are relevant in understanding funds’ performance. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance-industry standard that gives a perspective on how much investment reaches the funds. We have made a few adjustments and improvements to our calculation methodology as of 1 August 2021 that will impact historical and future data. Specifically, we revised the methodology used to estimate changes in gold holdings as described below: Previously, changes in tonnes were calculated by converting a fund’s AUM (in USD) into gold holdings (in tonnes) and computing the difference over periods. However, currency movements and large daily and weekly gold price movements could distort the difference between tonnage change and US-dollar fund flows during brief time horizons. We therefore adjusted tonnage change as a function of fund flows versus AUM and replaced the tonnage change field with fund flows (tonnes).

  2. Based on the LBMA Gold Price PM.

  3. ‘Other’ regions include Australia, South Africa, Turkey, Saudi Arabia, and the United Arab Emirates.

  4. Data for the week ending 29 November 2022.

  5. We calculate gold-backed ETF flows both in ounces/tonnes of gold and in US dollars because these two metrics are relevant in understanding funds’ performance. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance-industry standard that gives a perspective on how much investment reaches the funds. We have made a few adjustments and improvements to our calculation methodology as of 1 July 2021 that will impact historical and future data. Specifically, we revised the methodology used to estimate changes in gold holdings as described below:

    • Previously, changes in tonnes were calculated by converting a fund’s AUM (in USD) into gold holdings (in tonnes) and computing the difference over periods. However, currency movements and large daily and weekly gold price movements could distort the difference between tonnage change and US-dollar fund flows during short time horizons. We therefore adjusted tonnage change as a function of fund flows versus AUM and replaced the tonnage change field with fund flows (tonnes).
    • Now, for most funds, we estimate US-dollar fund flows, as described in section 2.3.2 below, and then convert those flows to fund flows (tonnes).
    • Fund flows (tonnes) and US-dollar fund flows will now represent a more aligned explanation of investment demand for gold ETFs, while the true holdings of a fund, in US dollars and tonnage, will remain a close estimate, impacted by the currency and price volatility described above.
    • Based on our initial analysis, the changes are not likely to have a material long-term effect on historical information, particularly on a global or regional aggregate basis, but will adjust short-term fluctuations that can sometimes occur due to input data and timing variations.