Despite the general recovery in precious metals prices in recent weeks, the ETF sector is still not seeing a big uptick. This is due to the fact that the gold reserves of the largest ETF fund SPDR Gold Shares (exchange symbol: GLD) fell by another 2.03 tons compared to the previous week and amounted to 906.35 tons as of November 16, 2022, which hits a new low for the year. At the same time, over the past five trading days, another $218 million of net capital has left the fund. It is worth recalling that each share of the SPDR Gold Shares Fund is backed by 1/10th of an ounce of physical gold.
However, iShares Silver Trust (SLV) silver holdings rose for the first time in four weeks. The increase was 40.08 tons to 14,735.74 tons. Each share of this silver ETF is backed by one ounce of physical silver.
Typically, an increase in the price of precious metals is accompanied by a significant increase in the share in the corresponding silver and gold ETFs. However, funds whose shares are backed by the physical metal tend to act as a catch-up. This means that their reserves begin to grow with some delay, following the rise in prices for gold and silver.
The services of ETF funds are mainly used by institutional investors who position themselves in the precious metals market using the “paper gold” instrument. Moreover, in recent years, these ETFs have become popular among young investors in the US who actively use discount broker apps on their smartphones.