Sparked by a flight to safety during the COVID-19 crisis, investors are turning to gold as a haven, which has boosted the price of the precious metal and led to a high demand for Canadian gold-equity and gold-bullion exchange-traded funds.
“People definitely use gold as a form of ‘apocalypse insurance,’” says Daniel Straus, head of ETF research and strategy with National Bank Financial Inc.
The demand has sent the price of gold above US$1,700 per ounce, an increase of about 11 per cent so far this year and about 32 per cent over the past year.
Canadian gold ETFs saw a surge of interest in April, pulling in $382-million – the biggest monthly gain in four years, according to National Bank’s monthly ETF-flows report.
The gold-ETF market in Canada is now worth nearly $3-billion, double from a year ago, says Ian Tam, director of investment research with Morningstar Canada. Gold-equity and bullion ETFs have all seen double-digit gains so far this year and in the past 12 months. However, “on the whole, equity ETFs have outperformed [bullion ETFs] year-to-date,” he says.