We won\u2019t know which brand-name money managers are selling off gold until the next round of quarterly portfolio filings, which I believe doesn\u2019t come until mid-May. But the fingers are already being pointed at hedge funds.<\/p>\n
Commerzbank\u2019s commodity strategists this morning float the idea that hedge funds are the big sellers when it comes to exchange-traded fund outflows. Keep in mind, ETF flows are the factor that lots of strategists lately are saying is the sina qua non of strength in gold\u2019s price. Whether that\u2019s actually true is unclear (though I\u2019ll bet that inflows have to help at least a bit). Here\u2019s Barclays Capital\u2019s commodity strategists arguing recently that gold\u2019s greatest risk is the loss of \u201cstickier\u201d ETF investors.<\/p>\n
Surveying the ETF flows, here\u2019s Commerzbank this morning: \u201dIt would appear that a number of institutional investors in the US \u2013 probably hedge funds \u2013 are currently withdrawing from gold, for the outflow from the gold ETFs is largely attributable to the SPDR Gold Trust in the US.\u201d<\/p>\n
The backstory is that the SPDR Gold Trust (GLD) has become the preferred gold investment for a number of institutional investors. With its deep liquidity and heavily traded options market, it\u2019s a more attractive exchange-traded means of buying and holding gold than resorting to the futures market for a great many investors. John Paulson\u2019s Paulson & Co., to take an oft-cited example, is the single biggest owner of GLD, with a little over 5% of shares outstanding.<\/p>\n