For years, gold ETF flows almost perfectly correlated to the price of physical gold.
That is, until early 2022 following Russia’s invasion of Ukraine.
A recent report from Goldman Sachs, analyzed by Zerohedge’s Tyler Durden, show a massive disconnection of gold ETF flows and the price of gold as central banks have tripled purchases dating back to 2022.
Recently, the report noted, ETF flows have turned positive following the sustained 30-month downtrend.
Durden speculated that gold prices are now correlating with hedge fund purchases due to the ability of managed money funds to collect and trade on non-public central bank information, which is widely assumed to be skewed as countries are often incentivized to obfuscate purchases.
With ETF flows into gold instruments now turning positive, Durden said it’s “no wonder that gold is hitting new all-time highs day after day.”
Gold ETFs are backed by physical gold, Goldman analyst Lina Thomas notes, meaning rising ETF holdings reduce the physical supply of gold available in the market. Goldman reiterated its price target of $2,700 an ounce by early 2025.
Gold prices opened U.S. trading Tuesday at $2,630.
With gold prices having risen precipitously despite higher interest rates being implemented by most countries in the global economy, Durden speculates that central bank buying has staved off any downside for the metal. Gold prices typically fall under higher interest rates due to its status as a non-yielding asset.
With many countries starting to begin easing cycles due to signs of economic weakness, the report suggests gold has much more upside in a climate presenting lowered interest rates.
Augusta Precious Metals
$0 (10 Years)
$50,000
"Best Overall" by Money Magazine, Award-Winning for 6 Years, Thousands of 5-Star Rankings
Expand Details
Renowned for its exceptional customer service and commitment to transparency, Augusta Precious Metals has garnered numerous accolades, including "Best Overall" from Money magazine and "Most Transparent" from Investopedia. The company's dedication to educating and supporting its clients has earned it top ratings from organizations such as A+ from BBB and AAA from BCA.Goldco
Vary
$25,000
Industry leader with over $2 Billion in gold and silver. Top rated precious metals company with buy back guarantee
Expand Details
From Precious Metals IRAs to direct purchases of gold and silver, Goldco have helped thousands of Americans place over $2 Billion in gold and silver. TOP-RATED PRECIOUS METALS COMPANY Rated A+ by the Better Business Bureau Rated Triple A by Business Consumer Alliance Earned over 6,000+ 5-Star Customer Ratings Money.com 2024 Best Customer Service 2024 Inc. 5000 Regionals: Pacific Ranked #17 2024 Gold Stevie Award, Fastest Growing Company Inc. 5000 Award Recipient, 8+ YearsBirch Gold Group
Vary
$10,000
Since 2003 BGG served over 32,000 customers. A+ rating with BBB, AAA from BCA & has multiple celebrity endorsements