There isn’t gold in them their hills.

The appeal of exchange-traded funds (ETFs) backed by traditional safe-haven gold has declined this year due to receding fears of a U.S. economic slowdown, surging bond yields, and strong equity performance, despite ongoing inflation concerns. According to the World Gold Council (WGC), overall holdings in more than 100 gold ETFs dropped to 3,348 metric tons as of August 18, the lowest level since April 2020. Gold is typically sought after during times of economic uncertainty and rising inflation. However, the recent performance of equities and Treasury bonds has overshadowed gold’s appeal. Despite higher interest rates, equities have outperformed gold, while Treasury bonds have attracted investors looking for safer options.

ETF Newz Says:

While gold’s performance in 2021 has been positive, with a return of 3.5%, it has lagged behind the 13.8% return of the S&P 500 and the 11% return of 10-year U.S. bond yields.

Although some investors have pulled out of the gold ETF space, there remains a positive view of gold as an asset diversifier. Gold’s share of global financial assets, excluding central bank holdings, currently stands at around 1%, down from about 5% during the 1970s inflationary period.

Heavily Traded ETFs
SPDR S&P 500 - SPY
Invesco QQQ
Vanguard S&P 500 - VOO
Vanguard Total Market - VTI
Energy Select Sector - XLE

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