Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
The World Gold Council released a report stating that as of August 31, global physical gold ETFs (exchange-traded funds) saw inflows of $2.1 billion in August alone, with gold holdings increasing by 28.5 tons. All regional funds reported gold inflows, marking the fourth consecutive month of net inflows. However, unlike before, the net inflow of gold ETFs was led by Western markets, while the Chinese market experienced a net outflow, ending an eight-month streak of net inflows.
This data reflects the strong demand in the gold market and a resurgence in gold investment interest, as well as indicating that the factors driving gold price increases are undergoing structural changes. Previously, price increases in gold were primarily driven by investors from the East, especially China. But as expectations of Federal Reserve interest rate cuts continue to rise, Western investors are returning to the gold market.
With the combination of rising gold prices and net inflows, the global gold ETFs’ assets under management (AUM) grew by 20% to $275 billion by the end of August, narrowing the year-to-date decline in ETF gold holdings to 44 tons.
Looking at specific regions, gold inflows to Asian funds have slowed but have maintained positive growth for the 18th consecutive month (0.3 tons), marking the smallest increase since May 2023. India’s ETF gold inflows were the highest since April 2019, driven by recent reductions in import duties that sparked enthusiasm among Indian gold investors. Japan also showed significant net inflows for the sixth consecutive month, and Australia reported an increase in ETF gold holdings for the third month in a row.
In stark contrast, the Chinese market saw net outflows of gold ETFs, ending its eight-month streak of net inflows.
After finally turning positive in July, North American funds led in August again, with gold holdings increasing by 17.2 tons and net inflows of $1.4 billion in dollar terms. This was driven by factors such as the near-certainty of a Federal Reserve interest rate cut in September, a significant drop in the yield of the US 10-year Treasury bond, and a decline in the dollar in August, reducing opportunity costs and pushing gold prices to new highs. Meanwhile, the significant rise in gold prices triggered the exercise of in-the-money call options on gold ETFs, resulting in substantial gold inflows on option expiration dates.
Overall, global gold market trading remains active. The average daily turnover in the global gold market reached $241 billion, a slight 3.2% decrease compared to the previous month.
Why are global gold ETF inflows so sustained? On one hand, the current macroeconomic environment remains complex and volatile, and gold, as a traditional safe haven asset, can offer greater security during market turbulence. On the other hand, the preference of central banks for gold reserves is also a significant driver of gold demand. As central banks around the world increase their gold holdings, market confidence in gold is similarly bolstered.
