The four exchange-traded funds backed by the metal that have attracted the most money this year are all based in Western Europe. Frankfurt-listed Xetra-Gold tops the list, bringing in about $544 million last week, the biggest weekly inflow since at least 2012, according to data compiled by Bloomberg.

European investors are piling into gold, fueling the metal’s rebound, amid concern that Trump’s "America first" rhetoric and plans to scrap regional trade deals will impede global economic growth. Adding to the anxiety is the impact from Britain’s exit from the European Union and the growing popularity of anti-establishment politicians running in this year’s elections in Germany, France and the Netherlands.

Exchange traded investment vehicles backed by physical gold refer to a group of trusts, funds, or other legal entities which hold gold bars with a custodian in a vault and which issue securities, units or other fractional ownership claims against that gold. These securities are pitched and marketed as an alternative to direct ownership of gold bullion and these products have seen significant expansion and evolution over the last 10-12 years.

There are a number of such products including Exchange Traded Funds (ETFs) and Exchange Traded Certificates (ETCs). These product classes now represent a relatively large footprint within the gold investing space. In addition to the very large and well-known SPDR Gold Trust (GLD) and iShares Gold Trust (IAU), there are several other similar products from providers such as ETF Securities, Source ETFs, and Xetra-Gold. At the time of writing, GLD held nearly 900 tonnes of gold, ETF Securities products held over 300 tonnes, iShares gold ETFs held approximately 275 tonnes of gold, and Xetra-Gold held 110 tonnes. Therefore, their combined gold holdings are now larger than all but the world’s largest central bank gold reserve holdings.

As popular as these securities are, it’s important to look at what exactly these products provide, and what they don’t provide when compared to ownership of segregated physical gold bars or gold coins.

GLD's holdings hit a 2016 high early July, but nearly 50 tonnes have been pulled from the fund since then, reducing the value of holdings by $5.5 billion as the gold price retreats. Year to date, holdings are up still up 290 tonnes.

The gold held in custody by Deutsche Börse Commodities GmbH for the purpose of physically backing the Xetra-Gold bond has risen to a new record high of 100.97 tons, an increase of approximately 70 per cent since the beginning of the year. For each Xetra-Gold bond, exactly one gram of gold is deposited in the central vaults for German securities in Frankfurt.

The recent rise is due especially to demand by institutional investors.

One of the most notable developments accompanying the gold price rally of 2016 has been the very large additions to the gold bar holdings of the major physically backed gold Exchange Traded Funds (ETFs). This is especially true of the SPDR Gold Trust (ticker GLD).

Central banks continue to report leased and swapped gold (gold receivables) as an asset on their balance sheets. This accounting fiction, which doesn’t follow any international accounting standards is a sleight of hand that allows the same gold to appear to be in two places at once. If gold bars that have been leased from central banks are being held in the SPDR Gold Trust, then these gold bars are being double-counted, and GLD shareholders should be made aware that the Trust is holding gold that has been ultimately borrowed from central banks. Using borrowed central bank in an ETF doesn’t put the ETF on the hook, since the ETF owns this gold. But it does mean that the bullion banks will need to return the equivalent borrowed gold to the lending central bank from other sources. Importantly though, this type of activity will overstate the amount of gold held by the combined official sector and ETF sector.

Demand for safe haven ETPs rise as uncertainty continues. Last week saw long gold, silver and long CHF recording strong inflows of US$433.5mn in total. Inflows into gold ETPs of US$263mn on Friday 1st July were at their highest since inception. Gold and the Swiss Franc have historically been sought after for their safe haven traits allowing investors to hedge portfolios from downside risks. We expect demand for haven assets to remain elevated as uncertainty surrounding the UK’s leadership contest and its formal exit from the EU block remain high. While the Bank of England is preparing for more monetary policy easing, Deutsche Bank and Santander failed the US Federal Reserve stress test again, keeping investors nervous.

The increase in shares brings the new eligible total far above the total Blackrock had available as of the gold price in 2011, and also above the last peak in IAU outstanding shares which peaked around 700 million.

This also means that there are no more structural limitations preventing IAU to buy as much gold as there is demand.

Once part of any true blue mutual fund portfolio in India, gold exchange traded funds appear to have fallen out of investors’ grace.

Gold ETFs saw outflows of $18 million (Rs 1.12 billion) for the 15th straight month, with AUM falling 1.44% to $1.2 billion (Rs 76 billion), with the underlying yellow metal dulling the sheen of owning paper gold for investors. The price of gold too fell 0.10% in August.