Gold ETF Buying Reached a Record High in the First Half of 2020
Last Thursday’s Wall Street Journal (July 9) revealed that the Gold Council’s quarterly report on gold demand, released this past Tuesday, showed investors poured a net $39.5 billion into gold exchange-traded funds (ETFs) in the first half of 2020, breaking the previous record high set in 2016. The Journal also reported that Wednesday’s (July 
most actively traded futures price closed at $1,820.60, which was only 3.8% below the previous record-high gold futures price of $1,891.90, set during August 2011.
The Journal article states the buying is coming mostly from “skittish” investors driven by a variety of fears “along with ultralow interest rates amid central banks’ efforts to prop up the world economy.” In addition, they wrote, “Precious metals are also getting a boost from unease about November’s presidential election and fresh geopolitical conflicts around the globe,” including tense U.S./China relations, a border dispute between India and China and new tensions in Korea. Another analyst called it a “perfect storm” of crises.
Gold ETF inflows were highest in April, which seemed to parallel the worst month of COVID deaths, but with COVID cases soaring in early July and deaths starting to rise again, interest in gold is also rising in July. Chris Mancini, an analyst at the Gabelli Gold Fund, said that, “It just seems like the momentum is going to continue. We’re starting to see more and more broad interest from people who don’t know much about gold and are trying to learn about the story.” A big part of that story is “The Fed can’t print gold.”
With the Treasury, Congress and the Federal Reserve adding up to $10 trillion dollars in the last four months in new deficit spending (by Congress), liquidity (in the Federal Reserve’s balance sheet), bond offerings (by the Treasury) and new electronic currency to fight coronavirus disruptions, there may be a wave of inflation coming next year. There is no way to “print” more gold. In fact, no new major gold mines are being found, so the amount of gold per dollar bills in circulation keeps shrinking, making each ounce of gold worth more per existing paper dollar, euro, yen, pound, rupee or yuan in circulation.
As we know from experience, whenever gold is rising this fast, many coin dealers place ads for bullion products, and many new investors buy bullion coins, causing gold and silver prices to rise even faster in a “virtuous cycle.” After a year or two, many of these new bullion customers then graduate into buying the far more selective market of rare coins, pushing the prices up, so now is the time to buy rare coins on sale. Call “Team Mike”, our long-time professional account representatives today!
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