International
Gold ETF Inflows Break Yearly Record In Just Five Months
Gold ETF Inflows Break Yearly Record In Just Five Months

Holdings in gold-backed ETFs charted another all-time high in May as inflows in dollar-terms have already set a yearly record just five months into 2020.
Globally, funds added another 154 tons of gold to their holdings boosting the total to a record 3,510 tons, according to the latest data released by the World Gold Council.
Over the past 12 months, assets in global gold-backed ETFs have nearly doubled.
In dollar-terms, year-to-date inflows of $33.7 billion have already exceeded the previous high seen back in 2016.
Another month of positive inflows in May, coupled with the rising price of gold, also pushed assets under management (AUM) in gold ETFs to a new record high of $195 billion.
North American firms led regional inflows for the second straight month and hit all-time highs in May. Funds based in North America increased holdings by 102 tons. North American funds now hold 1,815 tons of the yellow metal, surpassing the previous highs of 1,736 tons charted in December 2012.
European funds saw inflows of 45 tons. UK-based funds led the way, accounting for about 65% of the regional total for the month.
Asian funds – primarily those based in China – added to their holdings as well, with inflows of 4.8 tons.
Funds in other regions, including Australia, added 2.6 tons of gold to their holdings.
The World Gold Council listed four factors helping drive the flow of gold into ETFs.
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The economic and social impact of COVID-19, as most economies remain shut down or are slowly reopening.
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Tensions between the US and China continue to escalate.
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Labour markets are facing challenges not seen in generations. In the US, the unemployment rate is already at 14% and may soon reach levels last during the Great Depression of the 1930s.
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Monetary policy intervention is expanding into asset classes that would have seemed incredibly unlikely even a few months ago, such as high yield (junk) bond ETFs in the US. This has helped push bond yields even lower, reducing gold’s opportunity cost further and adding to market uncertainty as we are in unchartered waters.
Gold was up 2.6% in dollar terms in May. Price volatility was also lower.
At the time of publication, gold has outperformed most major asset classes this year, up by more than 15%. Gold’s performance continues to distinguish itself from the wider commodity spectrum, as broader commodity indices are down 22% – 30% this year and oil (WTI) is down by more than 40%.”
Inflows of gold into ETFs are significant in their effect on the world gold market, pushing overall demand higher.
ETFs are backed by physical gold held by the issuer and are traded on the market like stocks. They allow investors to play gold without having to buy full ounces of gold at spot price. Since their purchase is just a number in a computer, they can trade their investment into another stock or cash pretty much whenever they want, even multiple times on the same day. Many speculative investors appreciate this liquidity.
There are good reasons to invest in ETFs, but they aren’t a substitute for owning physical metal. In an overall investment strategy, SchiffGold recommends buying gold bullion first.
When considering gold-backed ETFs, you should always keep in mind that you don’t actually own the gold. Buying the most common ETFs does not entitle you to any actual amount of the precious metal.
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There’s a difference between investing in gold-backed ETFs and physical gold. Learn more here.
International
Canadian dollar edges higher as retail sales rebound
Canada retail sales climb 2% The Canadian dollar has posted losses on Friday. In the European session, USD/CAD is trading at 1.3446, down 0.28%. Canada’s…

- Canada retail sales climb 2%
The Canadian dollar has posted losses on Friday. In the European session, USD/CAD is trading at 1.3446, down 0.28%.
Canada’s retail sales jump
Canada’s retail sales rebounded in impressive fashion on Friday. Retail sales in July jumped 2% y/y, following a -0.6% reading in June and beating the 0.5% consensus estimate. On a monthly basis, retail sales rose 0.3%, up from 0.1% in June but shy of the consensus estimate of 0.4%. The good news was tempered by the August estimate, which stands at -0.3% m/m and would be the first decline since March. The Canadian dollar showed little reaction to the retail sales release.
The Bank of Canada doesn’t meet again until October 25th and policy makers will have plenty of data to monitor in the meantime. The BoC has been walking a tightrope that will be familiar to most central banks, that of trying to balance the risks of over and under-tightening. The difficulty in finding the right balance was highlighted in the BoC summary of deliberations of the policy meeting earlier this month.
The BoC decided to hold the benchmark rate at 5.0% after concluding that earlier rate hikes were having an effect and slowing economic growth. The summary indicated that policy makers were concerned that a pause might send the wrong message that rate cuts might be on the way. With inflation still above the BOC’s target, the central bank is not looking at rate cuts and stressed at the September meeting that rate hikes were still on the table and that inflation remained too high.
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USD/CAD Technical
- USD/CAD is testing resistance at 1.3468. The next resistance line is 1.3553
- 1.3408 and 1.3323 are the next support lines
International
Quantitative Tightening Is Not Biggest Threat To Global Yields
Quantitative Tightening Is Not Biggest Threat To Global Yields
Authored by Simon White, Bloomberg macro strategist,
The Bank of England’s…

Authored by Simon White, Bloomberg macro strategist,
The Bank of England’s quantitative tightening program shows that unwinding central-bank bond portfolios, even with outright sales, need not be disruptive for markets. The greater risk for US and global yields comes from positive stock-bond correlations driving risk premia wider.
The BOE has been a pioneer and a thought leader in QT. While the Fed and ECB have only allowed bonds to run off naturally to help achieve their balance-sheet contraction goals, the BOE has sold gilts outright in addition to allowing bonds to mature.
So far, it has not led to any significant market disruption. This enabled the BOE Thursday to increase the pace of reduction in the Asset Purchase Facility (APF) from £80 billion last year to £100 billion over the coming 12 months from October (while holding Bank Rate steady). As colleague Ven Ram also noted, the schedule of maturing bonds next year allowed the bank to keep gilts sales unchanged from last year while increasing the total amount of the APF’s decrease.
The QT watchwords from the bank are “gradual and predictable.” If gilt sales are conducted in such a way, then market disruption should be minimized. The chart below shows the BOE’s own assessment of the impact of bond sales on the market.
The BOE estimates that of the ~40 bps of term-premium increase since the MPC voted to begin QT in February 2022, about 10-15 bps comes from QT specifically – small in comparison to the overall rise in yields since that time.
QT or bond sales, though, are not the most critical risk facing bond prices in the current cycle. Rising and now positive stock-bond correlations threaten to lead to a structural rise in bond risk premium, and lower prices. The correlation is now positive in the US, Japan, and the UK.
In a positive stock-bond correlation world, bonds lose their portfolio-hedge and recession-hedge capabilities, and thus become less sought after. The penny has not fully dropped yet, but the negative term premium for bonds is increasing, and is prone to rising much higher as they become less desirable.
Yields of developed market countries are biased structurally higher, but QT is unlikely to be the culprit. Instead, it allows central banks to reload their capacity for a future time when they may need to restart quantitative easing, in order to stabilize the market from sharply rising term premia.
International
How ducks, geese and swans see the world – and why this puts them at risk in a changing environment
Our airspace has only started to become cluttered recently – many birds are struggling to navigate through it.

Each year, millions of birds fly into power lines, wind turbines and the other man-made structures that litter the open air space. These collisions frequently result in the death of birds and, if power systems go down, disrupt our lives and pose financial challenges for power companies.
Numerous bird species, including macaws in Brazil, geese and swans in the UK, and blue cranes in South Africa have been found to be susceptible to collisions with power lines. But any flying bird can fall victim to such a collision.
In some places, these collisions happen so often that they can jeopardise local populations of endangered species.
But birds are highly evolved flying machines. They can fly in tightly packed flocks that weave and turn to our delight and wonder. So why do they fly into things?
According to our latest research, the answer lies in how they see the world. We found that looking directly ahead is simply not that important to many species of duck, geese and swans.

How birds see the world
Exploring the reasons behind why birds are victims of collisions has led to new ideas that challenge our fundamental perception of what birds are. In the past, scientists have described birds as “a wing guided by an eye”. This implies that flight has been central to moulding bird vision throughout their evolution.
But now it is safe to conclude that a bird is instead best characterised as “a bill guided by an eye”. Rather than flight, the main driver of the evolution of bird vision has been the key tasks associated with foraging, in particular detecting food items and getting the bill to the right place at the right time in order to seize them. Alongside the detection of predators, this is the task that bird vision has to get right day in, day out.
Birds differ in how much the view from each eye overlaps (called the binocular field of view). The more the eyes look straight ahead, the more the view from each eye will overlap – much as human eyes do – thus broadening the binocular field. For a bird such as a duck, with its eyes positioned high up on either side of the head, the view from each eye will be very different (with smaller binocular field).
We measured binocular field size across a broad range of 39 species of duck, geese and swans. We found that the key driver of diversity in vision between species is their diet and how they forage for food.
Birds that primarily use their vision to locate foods such as seeds, or selectively graze on plants, tend to have broader binocular fields.
However, the binocular fields of species like mallards and pink-eared ducks are much narrower. These birds rely less on their eyes for foraging and more on touch cues from their bills. The vision of birds like these instead provides them with a comprehensive view of the region above and behind their heads.
Birds certainly need to have some visual coverage in front of them. But with eyes placed high on the side of the head, resulting in a very narrow binocular field, they are restricted to retrieving rather scant detail from the distant scene ahead. What matters to them more is placing their bill accurately at a close distance and seeing who is coming at them from the side or from behind.

This finding is not confined to ducks, geese and swans. It probably generalises to all birds, except perhaps some owls (which have more front-facing eyes and rely upon sound to locate prey). The great majority of birds are therefore vulnerable to collisions.
However, it is larger birds like geese, swans and bustards that face real problems. Their restricted forward vision is compounded by flying fast and being unable to change direction quickly. These birds also often fly in flocks, and at dusk and dawn when the light level is lower.
Warning birds of hazards ahead
Understanding the vision of birds from the perspective of foraging and predator detection improves our understanding of what causes collisions. But, more importantly, it allows us to do something about it.
We must not assume that a bird’s view of the world is the same as ours. We are specialised primates with eyes on the front of our heads, and we see the world in a very different way to birds, not only with respect to visual fields but also acuity and colour vision. So, we must try to take a proper “birds’ eye view” of the problem.
Birds are also flying fast. But, as they do so, they are taking in only gross information of what lies ahead – much as we do when driving our cars. As with car hazard warnings, it is necessary to alert birds using markers that may seem excessive.
Birds that are vulnerable to collisions have evolved to fly in airspace that only recently has started to become cluttered. To be clearly visible to a bird, especially to species like ducks and geese, devices that warn birds about hazards ahead must be large, highly contrasting and produce flicker.
When marking hazards, there is no place for subtlety.
Jenny Cantlay received funding from NERC and the RSPB for her doctoral research on avian vision whilst at Royal Holloway University.
Graham Martin does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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