UK Gold-Backed ETC Challenges Market, Sees 133% Growth So Far in 2022

UK Gold-Backed ETC Challenges Market, Sees 133% Growth So Far in 2022

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(Kitco News) – The gold market has struggled to attract investment demand as prices have trended sharply lower for most of 2022; however, a UK-based gold fund has seen extraordinary growth so far this year.

On Thursday, HANetf said its Royal Mint Responsibly Sourced Physical Gold ETC (LSE:RMAU) had seen its assets underestimated to $650 million, rising more than 133% so far this year.

“These inflows are particularly important given the recent negative performance of the spot price of gold. In September and October, the price of gold fell -4.48%, but RMAU received over $75 million in inflows, outpacing other gold ETCs,” said Hector McNeil, co -CEO and co-founder of HANetf, in a press release.

The inflows into the gold fund came as the UK economy experienced significant volatility. In September, the ruling Conservative Party voted for Liz Truss to replace Boris Johnson as Prime Minister. Truss’s leadership ended 50 days later after his proposed economic plan of unfunded tax cuts for the wealthy rattled the UK bond market and caused the pound to fall in historic shape.

Market turmoil has eased since Rishi Sunak was elected the third prime minister in as many months.

While RMAU could have benefited from some of that market volatility, McNeil said in a statement to Kitco that interest in the fund is driven by several factors, even though the broader market has struggled. rising US interest rates and the US crisis. dollar to its highest level in 20 years.

“We believe the longer-term investment case for gold remains intact. Gold is a diversifier; it is less volatile than equities and provides inflation protection. With the world facing such uncertainty, we believe these features will drive demand for gold, the current headwinds aside,” he said.

McNeil added that another factor helping RMAU outperform the broader gold market is due to its positive ESG attributes, a growing trend among investors. The gold held by RMAU in the vaults of the British Mint comes from fully responsible sources.

“ETC is 100% backed by the London Bullion Market Association (LBMA) post 2019 Good Delivery bars responsibly sourced, meaning the gold meets the highest responsible sourcing standard in the industry “, said McNeil. “Most importantly, some of these bars are cast from 100% recycled gold, which comes as waste from the manufacturing process. With recycled gold around 90% less carbon intensive than mining, this attracts clearly the growing number of investors looking for sustainable investment solutions.”

HANetf’s gold investing is slightly different from traditional exchange traded funds. The ETC is structured as debt securities and the gold serves as collateral for the note.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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