Buying ‘paper gold’ ETFs could be ‘huge failure’ if gold is in short supply — Bond King Gundlach – by Anna Golubova (Kitco News – April 2, 2020)

https://www.kitco.com/

(Kitco News) Surging demand for gold-backed exchange-traded funds is raising a red flag for DoubleLine CEO and Wall Street’s Bond King Jeffrey Gundlach.

Purchasing “paper gold [ETFs] could be a huge failure in entire gold-delivery system” as there is not enough of the yellow metal to cover all the paper demand, Gundlach said in a Tuesday webcast.

If, after buying a gold-backed ETF, investors might want to get their hands on that physical gold, there might not be any left, Gundlach warned. After big inflows last week, holdings in gold ETFs tracked by Bloomberg rose by another 16 metric tons Monday, putting them above 90 million ounces or over 2,800 tons for the first time, Commerzbank said.

The demand for ETFs has seen a boost recently with State Street Corp.’s $50 billion SPDR Gold Shares ETF (GLD) seeing $2.9 billion worth of inflows last week — its biggest gain since 2009.

The demand for the yellow metal in both physical and paper forms has been running high amid fears of a massive global economic slowdown due to the COVID-19 outbreak. Unprecedented monetary policy easing and fiscal stimulus are also boosting the case for owning gold.

For the rest of this article: https://www.kitco.com/news/2020-04-02/Buying-paper-gold-ETFs-could-be-huge-failure-if-gold-is-in-short-supply-Bond-King-Gundlach.html