Investors Flock To New Gold-Based ETF In Unprecedented Numbers

by Phillip Morton, Investors Offshore.com

26 November 2004

Well over $1 billion has been poured into a new gold tracker fund since its launch last week on the New York Stock Exchange as investors continue to sell the US dollar and seek sanctuary from a volatile energy sector.

The StreetTRACKS Gold Shares Exchange Traded Fund was launched by the NYSE on November 18 and is the first commodity-backed investment to list on the exchange, giving investors the opportunity to access the gold bullion market through a tradable security with each share representing one tenth of an ounce of gold.

According to TrimTabs Investment Research, net issuance on the first day’s trading reached $589 million, with inflows of $241 million and $419 million inflows tracked on November 19 and 22 - figures that have been described as unprecedented by observers.

“There’s been nothing like it in the history of ETFs,” stated Carl Wittnebert, Director of Research at TrimTabs.

“The spectacular success of this fund guarantees creation of more commodity-backed ETFs in the near future,” Mr Wittnebert added.

Gold, a traditional safe haven for the global investment community which typically rises as the dollar falls, is currently at a 16 year high after the commodity nudged above the $450 per ounce mark yesterday.

With analysts expecting the value of the dollar to continue deteriorating, and a tense political situation in Middle East continuing to spread uncertainty in the oil market, many expect the price of gold to hit $500 next year.

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