Another identity crisis at gold ETF Investor - fund or ETF?

This blog has had an identity crisis before.

There was another one last week: why do I invest in a fund rather than an ETF when it comes to gold mining companies? I only asked myself this question after seeing a piece on gold miner ETFs in Moneyweek - the inconsistency hadn't occurred to me before!

ETF Securities physical metal spreads widen massively in April

click on chart to enlarge

London Stock Exchange statistics show that spreads of a popular physical gold ETF  - the ETF Securities Physical Gold £  with the LSE ticker of PHGP  - widened to 1.36% in the week between 10 April 2012 and 13 April 2012.


In the same week two other ETF Securities products also saw massive spikes in spreads. The most dramatic commodity ETF spread was ETFS Tin (PHSN) which saw its spread widen to 14.77% when it was (already quite wide) at 2.3% the week before.

Also (on the chart above) ETFS Physical Swiss Gold (SGBS) saw its spreads widen to 2.3% for the same period when they were usually between 0.25 and 0.57 in the other figures I looked at.

Odd price moves on physical gold ETFs: SGLD, PHAU and PHGP

The gold price dipped below £1000 per ounce again this morning with both ETF Securities dollar and sterling etfs dropping as the dollar index spiked (above) and stock markets bounced starting in the US, may be inspired by US gains on  G8 and talk of Eurobonds.

But this is an excuse to post some odd physical gold ETF price moves from the recent past... however it starts with another mention of the common phenomenon of Fresnillo's price jumping as it did  at the end of trading yesterday (pic below) but peculiar price leaps in gold ETFs (listed below) seem to have calmed a bit - for now at least.

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.

Net £16m of physical gold ETFs sold on LSE on Tuesday March 6 2012

Total sales - I think - of physical gold ETFs on the London Stock Exchange today were worth £40.6 million while total purchases came to £24.6 million = net sales of £16 million.

Gold ETF bestseller for retail investors?

The three most heavily bought shares (by value) were the same as the three most heavily sold shares by investors using Hargreaves Lansdown on Friday. These were Barclays, Lloyds and the iShares FTSE 100 exchange traded fund.

The ETFS Physical Gold ETF (PHAU) was one of the few shares on the top twenty list that didn't also make a showing on the list of shares being dumped at high speed by investors.

On Thursday Hargreaves Lansdown published an interim management statement which said that the number of clients opening accounts had increased but added that it wasn't expecting much action from them: "Whilst uncertainty remains about sovereign debt and default and a possible second recession, it is increasingly likely the retail investor will feel they need more pounds in their pocket and may continue to defer new investment decisions."

It's hard to tell if their buying and selling lists illustrate this prediction, or whether retail investors see gold as a kind of cash.

Also on Thursday the Sterling denominated PHGP was the gold ETF of choice (At close on Friday the spreads for PHGP were bid 10,382 offer 10,385 or 0.028% which were narrower than the spreads for the dollar denominated PHAG $164.09 and $162.3 or 0.12% - I was under the impression it was usually the other way around.)