When it comes to soaring precious metal, and especially gold, prices there is little surprise what the source is: investors are dumping near record amount into Precious Metal mutual and ETF funds. Fund Flow tracker Lipper confirmed as much last night when in its latest weekly summary it calculated that investors poured the most money into U.S.-based funds invested in precious metals since February, adding $2 billion to these funds in the latest week.
Fund investors bid up gold and other precious metals prices during the seven-day period ended July 6 in the aftermath of the June 23 Brexit vote. SPDR Gold Shares was especially popular, taking in $1.4 billion over the week. "Investors had been down on gold for such a long period of time," said Tom Roseen, Lipper's head of research services.
The latest weekly inflow is simply a continuation of ongoing trends: precious metals funds posted strong gains in four of the past five weeks, rising more than 4% over the most recent week Lipper measured. The latest week marks the 10th straight week of inflows for gold funds.
Safe-haven U.S. Treasury funds also reeled in $864 million, their third straight week of inflows, according to Lipper. Taxable bond funds took in $4.1 billion, following strong weeks for corporate-debt funds.
While safe assets saw more massive inflows, the picture was mixed for risk assets. Investors pulled $1.3 billion from financial-sector funds during the same week - the largest outflows since the week ended July 15, 2015 - as yields on long-term U.S. Treasury debt sank to record lows. Emerging markets, by contrast, have been helped by central bankers' loose monetary policy, their distance from the European drama, healthy yields and a rebound in oil prices this year. Emerging-market debt funds took in $481 million, their largest inflows since early March, Lipper said.
Investors pulled $1.3 billion from financial-sector funds during the same week - the largest outflows since the week ended July 15, 2015 - as yields on long-term U.S. Treasury debt sank to record lows.
But the biggest fund flow surprise was in the space of equity funds. According to Lipper stock funds - including both mutual and ETF funds - posted yet another week of outflows totaling $1.4 billion. The optimism of exchange-traded fund investors that the Brexit vote might not derail stocks was nonetheless overwhelmed by a long-running trend of withdrawals from stock mutual funds.
And while stock ETFs took in $4.6 billion in the latest week ended Wednesday, U.S.-based stock funds posted $6.1 billion in outflows in the latest week, their 17th week of cash withdrawals, according to Lipper data.
So following 17 straight weeks of mutual fund outflows what happens? Well, stocks are right back to all time highs.
Thank you buybacks, oh and central banks who made all of this possible.