Gold ETF Investment Falls

GOLD ETFs saw net outflows equivalent to 57 tonnes of gold in the first quarter of 2011, according to figures published by the World Gold Council (WGC).

Gold ETFs monitored by the WGC held 2167.4 tonnes on December 31 2010. This amount fell to 2110.3 tonnes by the end of the quarter.

Earlier this month Philip Klapwijk, chairman of leading precious metals consultant GFMS, suggested that cost savings may account for some of the moves out of ETFs and into physical gold ownership

"Some of this apparent slack in ETFs... is believed to have been taken up by allocated gold accounts, which can incur costs of as little as 0.1% per year," he said. "ETFs typically charge around 0.4% per year in fees for investment management, as well as charging brokerage fees for every transaction made."

Allocated gold is gold that is owned outright by an investor and stored in a professional bullion vault.

There is anecdotal evidence that Q1 2011 of the year saw a continuation of the rise in physical gold ownership seen in recent years.

In China, physical delivery at the Shanghai Gold exchange rose 17.7%. 

The WGC reports that investors in India "witnessed shortages of physical supply and an increase in domestic market premiums" in January.

Meanwhile US investors continued to be steady buyers of physical gold, buying  9.3 tonnes in American Eagle Gold Coins in Q1 2011, according to the US Mint. 

At BullionVault – the world's leading online provider of physical gold ownership – investors bought a net 0.73 tonnes of physical gold in Q1 2011. This compares to 0.36 tonnes during the same period last year.

To buy and own physical gold – and benefit from safe storage – visit BullionVault...