Funds Boost Gold ETFS to Record

Source:

"GLD is now the second biggest U.S. ETF, with market value of $27.5 billion, which ranks it behind only the popular SPDR S&P 500."

Investors expecting years of inflation and global economic instability are pouring money into securities backed by gold bullion, helping turn a simple safe haven into a mainstream asset class.

SPDR Gold Trust GLD.PGLD.A, popularly known as GLD, said the gold bullion it owned rose by more than 100 tonnes to 970.57 tonnes as of Thursday, which marked the biggest weekly gain in the history of the gold-backed exchange-traded fund.

However, fund managers say that setbacks in the price of gold are possible following a sharp rally when investors small and large are piling into the yellow metal.

GLD is now the second biggest U.S. ETF, with market value of $27.5 billion, which ranks it behind only the popular SPDR S&P 500. GLD currently owns more gold bullion than the government of Japan, according to the World Gold Council.

Holdings of COMEX Gold Trust IAU.P, another U.S. gold ETF, also climbed to a record high 70 tonnes on Friday.

Diversification into gold out of traditional asset classes, such as stocks, bonds and currencies, by many sizable non-gold investment funds has fueled GLD's rally. Some pension funds and advisors to wealthy investors are now recommending 5% to 7% allocation toward gold and gold stocks.

"More and more generalist money managers are looking at gold. A lot of money managers find comfort with the idea of owning gold via GLD. It's quite convenient to own the GLD, versus having to pay warehouse costs on your own," said Brian Hicks, co-manager of the $500 million Global Resources Fund at Texas-based U.S. Global Investors.

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