Tuesday, 20 March 2012

iShares physical gold ETF spreads shot above 3%

Weekly ETF trading data from the London Stock Exchange show that physical gold ETFs make up the majority trading in exchange traded products and that spreads -  the difference between the buying and selling price of shares - for one of these physical gold ETFs rose above 3% at the beginning of the year.

I haven't looked at all the physical gold products available. The figures below cover ETF Securities' physical gold products PHAU ($), PHGP (£) and GBS ($), as well Source's SGLD ($), db x-trackers XGLD ($) and iShares' IGLN ($) and  SGLN (£). 

The chart below shows the weekly turnover for  the selected physical gold ETFs traded on the London Stock Exchange over the last 15 weeks (as far back as I could be bothered to go back) from the  week end 9 December  2011 to the week ending 16 March 2012. (click on charts to enlarge)

The chart below shows the total turnover for each product over the 15-week period  ending on 16 March 2001. 

The chart  below shows the average trade sizes per week for the selected physical gold  ETFs and it also clearly shows the Source product has the largest trades with the most volatile trade sizes from XGLD, the  Deutsche  Bank ETF. 

The chart below  shows the average trade sizes over  the 15 week period. This shows that investors trading the Source gold ETF did so in much larger chunks than the other  products, while the products with the  smaller trade sizes were more likely to be retail customers - the smallest trade sizes were  in sterling denominated ETFs.  


The chart below shows that the iShares sterling denominated physical gold ETF saw its spreads spike to 3% in the week after New Years Eve as gold started its rally from $1,523 per  ounce.  I'll see if iShares has an explanation.

Below is  an effort to look a bit closer but it doesn't seem to add much and it's a bit too late in the evening to think it through. 

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