(Kitco News) Trading behavior is changing in the gold space with investors preferring physical versus paper while at the same time investing more in ETFs than futures, according to Commerzbank.
Traders issued the largest delivery notice on record at Comex, declaring their intent to deliver 3.27 million ounces of gold against the August Comex contract.
“According to traders, 102 tons of gold were delivered to the holders of expiring gold future contracts on the Comex last Thursday – this also fits the picture of changed investor behavior,” said Commerzbank analyst Carsten Fritsch. “Physical deliveries on the Comex have been rising for months: they totaled just 26 tons in February, 98 tons in April and as much as 171 tons in June.”
This trading pattern shows that investors prefer physical to paper gold, Fritsch pointed out.
Despite the want for physical, no shortages are expected, the analyst added. “Still more gold is being shipped into the COMEX warehouses than delivered on a net basis. Currently over 1,100 tons of gold are being stored there, so no shortages of standard bars are to be expected, even if investor demand remains high,” he said.
Another shift in the trading pattern has been investors’ preference for gold ETFs versus future contracts, according to Commerzbank.
“Clearly there has been a shift in investor preferences: rather than investing in futures contracts, they are opting to put their money in gold ETFs,” said Fritsch.
Massive inflows are the proof with 155 tons, which is half of monthly global mine production being reported in July alone, the analyst said, citing Bloomberg data.
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