ETF demand driving gold fever in 2020; banks with vault space stand to benefit

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ETF demand driving gold fever in 2020; banks with vault space stand to benefit
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IN THE 19th century California gold rush, the surest way to a fortune, according to Mark Twain, was to be in the 'pick and shovel business'. Read more at The Business Times.

"At these times, it's a very good business to be in," said George Milling-Stanley, chief gold strategist at State Street Global Advisors, the marketing agent for the largest gold ETF, SPDR Gold Shares or GLD."There's no question in my mind that ETF demand is driving gold right now."

GLD is delivering some US$300 million of fees a year at current holdings and prices. That's good news for State Street and also for the World Gold Council - a mining industry-backed group that helped create the ETF - as both take a cut of those fees. Vaulting typically accounts for roughly 10 per cent of the US$1.1 billion to US$1.2 billion a year that banks earn from precious metals, according to Amrit Shahani, research director at Coalition Development. But he said that figure"will be pretty much double" this year.

The record pace of silver buying by ETFs is causing other headaches. Bulkier and less valuable than gold, it takes up large amounts of space in a vault.

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