Too Late For Metals?

Exchange-traded funds are making it easier for individuals to place sophisticated bets on precious metals, but there are concerns these buyers are hopping on the bandwagon late.

Many investors are by now familiar with SPDR Gold Shares (CONSOLIDATED:GLD) — the second-largest U.S.-listed ETF, holding assets of almost $60 billion.

With almost 1,300 metric tons of bullion in its coffers, the ETF now owns more gold than all but five government central banks, says Nicholas Colas, ConvergEx Group chief market strategist.

One of the most important sources of demand for gold, and to a lesser extent silver, comes from ETFs, Colas wrote in a Nov. 12 research note. “That’s a relatively new source of gold demand as compared to the traditional buyers of the yellow metal.”

There are concerns, though, that investors are piling into gold ETFs just in time for a price correction. Last week’s pullback is a reminder that gold can see wildly volatile swings. (more)