Investors are dumping gold-backed exchange-traded products (ETPs) at the fastest pace since the securities were created a decade ago, mirroring the steepest price drop in 32 years.
Holdings in the 14 biggest ETPs plunged 31 percent to 1,813.3 metric tons since the start of January, the first annual decrease since the funds started trading in 2003, data compiled by Bloomberg show. The removals erased $69.7 billion in the value of the assets as prices fell by the most since 1981. A further 311 tons will be withdrawn next year, according to the median of 11 analyst estimates compiled by Bloomberg.
Tuckwell’s ETF Securities Ltd. oversees the second-largest gold-backed ETP, according to data compiled by Bloomberg. Zuercher Kantonalbank, Switzerland’s biggest state-owned regional bank, and BlackRock Inc., the world’s leading money manager, are the next-largest operators.
“Gold ETPs are preferred by a lot of people because at the end of the day it’s easier to trade and easier to manage your portfolio,” said Francisco Blanch, the head of commodities research at Bank of America Corp. in New York. “And it’s probably cheaper. If you buy physical bars, you have the cost of the bar, but you also may have to pay for storage of the physical bar. The ETP does all of that for you.”