Market Overview

Gold Passes $1,800 Mark For The First Time Since 2011, ETFs See Increased Inflows

Gold Passes $1,800 Mark For The First Time Since 2011, ETFs See Increased Inflows

Gold prices surpassed the $1,800 mark for the first time since 2011 on Wednesday as a resurgence in coronavirus infections sends investors toward safe haven investments.

The Gold Landscape: The environment is still looking very good for gold and gold miners, Arnaud du Plessis, portfolio manager specializing in precious metals and natural resources at CPR Asset Management, says in an emailed note.

“Central banks are staying on full alert as the resurgence of COVID-19 in some parts of the world is creating fears of a second-wave. This unique situation is generating growing interest in the barbarous relic, in the form of both the physical metal and gold-mining stocks able to offer investors potentially very significant performance leverage,” says Plessis.

The profit outlook for the gold mining sector is continuing to improve, he says

“Twelve-month profits have been revised up by more than 84% year on year, thus supporting the market trend. The substantial upwards revision of the average gold prices forecast for 2020, which now stand at $1,670/oz versus $1,554/oz at the end of March and $1,500/oz at the start of the year, have contributed to this trend.”   

Gold-Backed ETF Assets: The enthusiasm for physical gold is as strong as ever judging by the exponential growth in total gold-backed ETF assets, which reached new heights in June at 3,201 tonnes, says Plessis.

“The equivalent of 86 tonnes was added in June, for example 622 tonnes since the start of the year, close to the record set in 2009 (644 tonnes for the full year). Note that the 385 tonne increase in assets in the second quarter of 2020 is the largest since 2016, “ adds Plessis.

Fosterville South (OTC: FSXLF) CEO Bryan Slusarchuk says gold is a store of wealth, a hedge against uncertainty and a currency.

"We are in a period of quantitative easing infinity and are seeing monetary and fiscal stimuli like never before. There is huge printing of all paper currencies right now and as the saying goes, the Fed can’t print more gold. So, inherently, gold is becoming more valuable every day,” he says.

Price Action: The SPDR Gold Trust (NYSE: GLD) was up 0.63% at $170.10 at last check, while the VanEck Vectors Gold Miners ETF (NYSE: GDX) was up 1.78% at $38.40.

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