Sales of gold from exchange-traded products in 2013 have surpassed combined inflows over the past two years, with investors cutting holdings at a record pace as the metal tumbled into a bear market on reduced haven demand.
Global ETP assets contracted 10.27 metric tons to 2,177.12 tons yesterday, taking reductions to 454.8 tons this year, according to data compiled by Bloomberg. That’s more than the combined inflows in 2011 and 2012, which totaled 446.67 tons. Assets reached a record 2,632.52 tons on Dec. 20.
Gold fell 18 percent this year on expectations the Federal Reserve may scale back the stimulus that helped the metal cap a 12-year bull run in 2012. Prices are going to get crushed as inflation remains subdued and risks of bad events diminish, according to Credit Suisse Group AG, which forecasts a drop to $1,100 an ounce over 12 months. Filings this month showed George Soros and BlackRock Inc. cut ETP stakes in the first quarter.
“The ETF sales have been coming out at the same pace that we mine gold each year, so effectively that doubles current supply,” said Steve Land, lead portfolio manager at Franklin Templeton Investments’ Franklin Gold and Precious Metals Fund, which has more than $1.34 billion in assets under management. “The market has had a lot of metal to absorb.”
Gold for immediate delivery traded at $1,377.43 an ounce at 10:33 a.m. in Singapore. The price reached a more than two-year low of $1,321.95 on April 16 as the dollar strengthened and optimism increased that the U.S. will lead a global recovery.
ETP holdings have fallen 17 percent in 2013 after expanding every year since the first product was listed in 2003, data compiled by Bloomberg show. Assets in the SPDR Gold Trust, the biggest gold-backed ETP, fell to 1,023.08 tons yesterday, the lowest since February 2009, data on the company’s website show.
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