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Bloomberg, (20/6) -- Holdings in the
SPDR Gold Trust, the world’s largest exchange-traded product backed by
bullion, fell below 1,000 metric tons for the first time in four years,
wiping $30 billion from the value of the fund this year.
Assets slumped 351.3 tons, or 26 percent, this year to 999.56 tons, the lowest since February 2009, according to data compiled by Bloomberg. Holdings reached a record 1,353.35 tons in December. Billionaire John Paulson is the biggest investor. Bullion sank to a one-month low today after Federal Reserve Chairman Ben S. Bernanke said asset purchases may be reduced later this year as the economy strengthens. The drop in holdings underscores how some investors have lost faith in the metal as a store of value amid low inflation and a global equity rally. “Gold’s weakness is related to the willingness to take risk and we expect ETF liquidation to continue in the coming months,” said Dominic Schnider, head of commodities research at UBS AG’s wealth-management unit in Singapore. “Many of the SPDR investors are in the U.S. and people there probably feel that there are better opportunities” elsewhere, he said. Bullion declined 20 percent in 2013, sliding into a bear market in April, as the MSCI All-Country World Index of equities climbed 6.7 percent, and the dollar gained 2 percent against a basket of six major currencies. Gold rallied for 12 years through 2012 as the Fed cut borrowing costs to a record to bolster the economy. Bernanke said yesterday the central bank, which currently buys $85 billion of Treasury and mortgage debt each month, may begin reducing purchases this year and end the program in 2014 should the U.S. economy continue to improve. The Federal Open Market Committee raised its U.S. growth forecasts for 2014. Cash gold lost as much as 0.9 percent to $1,339.60 an ounce, the cheapest since May 20, and traded at $1,340.55 at 8:26 a.m. Singapore time. While prices rebounded from a more than two-year low of $1,321.95 on April 16 as the rout spurred a purchasing frenzy of coins, bars and jewelry from China to India and the U.S., they have tumbled 30 percent from an all-time high of $1,921.15 in September 2011. U.S. government filings in May showed billionaire investor George Soros joined funds run by Northern Trust Corp. and BlackRock Inc. in cutting holdings in SPDR assets in the first quarter. Paulson kept his stake of 21.8 million shares. Paulson posted a 13 percent decline in his Gold Fund last month, according to a letter to investors. The drop brings losses in the strategy to 54 percent since the start of the year, the firm said in the letter, a copy of which was obtained by Bloomberg News. The Gold Fund is the smallest strategy of the $19 billion money manager, with about $360 million, or 2 percent of assets, most of it Paulson’s own money. Holdings in global ETPs backed by gold shrank 517.4 tons, or 20 percent this year, to 2,114.6 tons, the least since March 2011, data compiled by Bloomberg show. Assets reached a record 2,632.52 tons in December. The number of hedge funds investing in gold globally shrank to 290 in May, the lowest since 2010, from 310 in December, with their assets slumping 31 percent this year to $22.2 billion on losses and redemptions, according to EurekaHedge Pte Ltd., a Singapore-based fund-research company. “The ETF size and the outflows from the ETF market have a disproportionate effect on the sentiment of the market because of their extreme visibility,” Mark Keenan, an analyst at Societe Generale SA, said this week on Bloomberg Television’s “First Up” with Zeb Eckert. “We see ultimately about 800 tons coming out of the ETFs for this year.” |
Written by: Kontak Perkasa Futures
PT.Kontak Perkasa Futures, Updated at: 9:08 AM
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