Gold ETFs Hot for 2011 Despite January Fall


"Asian gold premiums hit record highs last month."

Is the investor appetite for gold exchange traded funds (ETFs) waning? Investor holdings in exchange traded funds in (ETFs) gold have fallen in January 2011 thanks to the drop in the prices of gold. Despite the dip, a bright future in Gold ETFs awaits investors in 2011.

Holdings in SPDR Gold Shares, the world's largest gold-backed ETF, dropped by around 53.6 metric tons in January, according to the information available from the fund's web site.

The fall in SPDR Gold Shares holdings is the second-largest monthly outflow ever, behind April 2008, for the ETF since its launch in 2004.

However, a report from Barclays Capital says that while exchange-traded-fund holdings of gold fell in January, Asian gold premiums nevertheless remained strong, having hit record highs last month.

While Gold ETFs are hot investment vehicles in countries like the United States, Britain and Canada, a slew of companies have already launched ETFs in gold in countries like India, China and the Middle East region. In 2011, emerging markets led by China and India will attract a huge chunk of investment in ETFs in commodities led by gold, says a report from Commodity Online Bullion Research team.

Global Gold ETF scene is going to change drastically, as China has finally decided to get into the hot ETF investment sector. India, that already has eight Gold ETFs, will see the birth of several more exchange traded funds in the yellow metal and silver in 2011, it said.

"Investment in Gold ETFs in emerging countries led by China and India will leap by at least 40% in 2011 as a clutch of mutual funds, banks and private sector companies are getting ready to tap the ETF sector in these markets," said the bullion research report.

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