Investment Strategies
A Spanish Bailout Could Trigger Dash For Gold ETFs, Says ETF Securities

UK-basedETF Securities believes investors have exited gold positions after policy inertia in Europe, in a development that appears contrary to conventional market dynamics.
Last week, gold exchange-traded commodities saw outflows of $88 million, the largest weekly outflow since February. Gold traded in a range between $1602 and $1625/oz during the course of the week.
The UK-based firm believes an official bailout request by Spain might be a catalyst booting investor appetite for precious metals, although gold is seen as a safe haven asset many are keen to invest in at time of crisis. In June, Spain became the fourth eurozone country to receive outside assistance to stay afloat, in the shape of a €100 billion ($123.6 billion) emergency loan directed towards the country’s ailing banking sector.
ETF Securities thinks Mario Draghi, president of the European Central Bank, has so far failed to follow through on his pledge to do whatever it takes to save the euro. Many investors have waited for Draghi to turn the ECB into a more dynamic institution with powers to intervene in bond markets, but the Italian has not managed to increase its mandate. Collins Stewart Wealth Management has said that Draghi has proven to be as "guilefully prolix" as his predecessor, Jean-Claude Trichet.
"Investors are looking for action from policy-makers and central banks and any signs they may provide additional liquidity to sovereigns and/or banks will likely be taken positively by the markets, with cyclical commodities and precious metals likely key beneficiaries," ETF Securities says in a market comment. "Unfortunately, it may take another dip into crisis to push Europe’s leaders out of their continued state of inertia."
"Although market speculation has grown in recent weeks over the prospects of further US and European monetary easing, lack of action by central banks has left gold investors unconvinced," ETF Securities.
The Federal Reserve in the US is widely expected to announce a third round of asset purchases this year. The discussion is centred around whether this will take place next month or later in the year closer to the presidential election.