Nervous investors have bought more than 1,000 tonnes of gold this year, a record figure equivalent to the entire hoard the Swiss National Bank has stashed away in its vaults.
For centuries people have considered gold a store of value in turbulent times. In 2020 they have been buying it in droves.
Gold exchange traded funds (ETFs) recorded their tenth consecutive month of positive inflows in September for only the third time since the financial crisis. This was despite gold experiencing its biggest monthly price drop since November 2016, falling 3.6%, after reaching a new all-time high in August.
With concerns mounting about the outcome of the upcoming U.S. election and a second wave of coronavirus infections, will the precious metal retain its lustre in the fourth quarter?
Investors certainly believe so. Figures this week from the World Gold Council (WGC) show globally, they have poured $55.7 billion into gold ETFs this year. ETF managers have had to buy 1,003 tonnes of the metal to meet rising demand, smashing the 2009 peak of 646 tonnes and taking inventories up to a record 3,880 tonnes or $235 billion.
This wall of money helped push the gold price up to a new high of $2,075 an ounce in early August. Despite the pullback in September, the yellow metal ended the third quarter up 6%, its eighth straight quarter of price gains. Gold is now up more than 20% this year, way ahead of the S&P 500’s gains.
The WGC believes last month’s price fall was “likely tactical in nature”, resulting mainly from profit-taking and rebalancing around the quarter-end.
Global investors still increased their gold exposure by 7%, or $4.6 billion, overall in September.
Anxious American investors have been