Gold and macro environment, page-161

I have been watching EFT physical gold inflows/outflows for a few months. These two articles in the last few days note that inflows have been positive since late June - I have also seen other mentions.



https://mining.com.au/gold-etf-investors-come-alive-as-us-rate-cut-teases/?utm_source=Mining.com.au&utm_campaign=95ad397f82-EMAIL_CAMPAIGN_2023_09_20_05_04_COPY_01&utm_medium=email&utm_term=0_-4f58c5

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https://www.finnewsnetwork.com.au/archives/finance_news_network470750.html?mc_cid=a3381ccc1d

Why does this matter?

Well the last two gold bull markets (ie from 2003 to 2011 and from 2015 to 2020) were almost to totally driven by big buying by ETFs as demonstrated by the charts below. From 2003 to 2011 ETF’s brought heaps of physical gold when the POG went from about $300 to well over $1,500 and from 2013 to 2015 it fell to less than $1,000 when ETFs outflows were high, while POG went up from less than $1,000 in 2015 to over $2,000 in 2020 with strong gold ETF inflows. Central banks were net sellers of gold until about 2010 and its only since 2022 that their buying has really escalated.

The exception has been from 2021 to 2024 (to June) when EFTs had strong outflows but central bank and Asian demand buying has seen the POG end up at $2,500.

If we end up seeing strong physical gold ETF inflows in the future from the US and Europe we will probably see a significantly higher POG. The recent inflows into gold ETFs are relatively small so gold ETF inflows are worth watching. My own view is we will not see a significant inflow unless the US sharemarket falls significantly.