ETFs are one of the most popular ways to invest in gold. Shares in ETFs represent gold bars held in vaults and are easy to buy and sell, freeing investors from the difficulties of buying and storing bullion themselves. In an analysis about investors shunning Russian gold, Reuters examined lists of gold bars owned by eleven large funds.
Around July 12, these funds between them held 2,540 tonnes of gold. By late November, that total had fallen 10% to 2,295 tonnes. The eleven funds account for two-thirds of all the gold held by ETFs globally.
In July, all eleven held Russian metal. By late November, the proportion of Russian gold in the stockpiles of eight had fallen. In five funds, the amount of Russian gold tumbled by more than 40%.
Two of these got rid of Russian gold altogether. In three funds, the proportion of Russian gold in their holdings rose slightly. The gold owned by ETFs is managed by banks, which can give the funds any gold eligible to trade in London, including Russian metal manufactured before the war in Ukraine.
Funds can ask for gold of a particular type or origin to be prioritised, but banks are not typically obliged to do this. Russia is one of the world's biggest producers of bullion and many gold bars made in Russia have been in the Western financial system for years. But some investors do not want assets linked to Russia since it invaded Ukraine in February.
Following are data and comment from the funds. BRAND OPERATOR CUSTODIAN AMOUNT OF % OF CHANGE IN CHANGE IN GOLD IN HOLDINGS HOLDINGS HOLDINGS LATE THAT WERE OF RUSSIAN OF NOVEMBER(TO RUSSIAN IN GOLD SINCE NON-RUSSIA NNES) LATE JULY N GOLD NOVEMBER SINCE JULY SPDR Gold World Gold HSBC 903 2.8% 3% -12% Shares Council iShares Gold BlackRock JPMorgan 452 11.4% -9% -11% Trust Invesco Invesco JPMorgan 249 12.7% -9% -6% iShares BlackRock JPMorgan 246 10.6% -23% -9% Physical Gold WisdomTree WisdomTree HSBC/JPMorg 141 2.2% -44% -8% an SPDR Gold World Gold ICBC 89 13.4% -48% 18% MiniShares Council Standard Amundi Amundi HSBC 74 0% -100% 2% Bullion WisdomTree HSBC 60 0% -100% -3% Securities Aberdeen abrdn JPMorgan 41 8.3% -22% -7% Standard WisdomTree WisdomTree JPMorgan 25 14.4% 4% -7% Hedged GraniteShares GraniteShares ICBC 15 20.2% -41% 3% Standard TOTAL 2295 7% -19% -9% WORLD GOLD COUNCIL (SPDR) The WGC said that pre-war Russian gold bars are still considered 'good delivery' by the London Bullion Market Association (LBMA) and as such, the WGC subsidiaries managing its funds make no distinction between them and any other good delivery gold. SPDR Gold MiniShares, whose gold is stored by ICBC Standard, saw an almost 50% fall in the amount of Russian gold it holds.
The WGC said its fund managers had not asked any of the banks storing gold to cut their stock of Russian metal. BLACKROCK (ISHARES) BlackRock declined to comment. INVESCO "We have not altered our approach to bars that were produced prior to sanctions by Russian refiners," said Chris Mellor, Head of Invesco ETF Equity and Commodity Product Management.
"These bars remain Good Delivery standard and can continue to be traded in the market. I would imagine that over time we will see a steady reduction in Russian bar exposure as the level of Russian produced bars falls as a proportion of the total market," he said. WISDOMTREE WisdomTree did not respond to requests for comment.
AMUNDI Amundi did not respond to requests for comment. ABRDN Abrdn said it was sensitive to the issues surrounding Russian bullion but that its main focus was to work with its vaulting bank, JP Morgan, to make sure that gold bars in its fund were made in or after 2012, when the LBMA introduced responsible sourcing rules. It said its stock of Russian gold may be falling due to this focus on newer bars, and that it was able to use movement of gold into and out of the fund to manage exposure to particular types of metal.
Russian gold bars refined before March 7 this year are still eligible to own and trade, it said. GRANITESHARES GraniteShares said it did not distinguish between different brands of good delivery gold including pre-war Russian gold, and that it had not asked its custodian, ICBC Standard, to reduce its holdings of Russian bullion. "The metal that comes in and out of the vault is organized by the custodian and the only stipulation is that it is "good delivery" gold," said GraniteShares founder Will Rhind.
"Given BAR (the fund) has had redemptions this year, the custodian may have taken that opportunity to prioritize the redemption of Russian bars versus others ... That would be their decision to make." (Reporting by Peter Hobson; Editing by Alexander Smith) By Peter Hobson