Xetra-Gold: value more than quadrupled since launch

When Xetra-Gold was launched in Europe in November 2007, the gold price per gram was €17.47. Today, 17 years later, one share of Xetra-Gold costs €82.74 – which is well over four times as much. Gold holdings managed in this ETCs (Exchange-Traded Commodities) today (as at 30 October 2024) amount to 175.83 tonnes, at a current value of €14.4 billion. Xetra-Gold is one of the most heavily traded ETCs in the Eurozone.

Investor demand for exchange-traded gold funds initially only met in North America

Gold funds backed by physical gold are by no means an invention of the new millennium. The Central Fund of Canada, the first gold-backed fund worldwide, was listed at the Toronto Stock Exchange in 1966. However, it was a closed-end fund, as common in real-estate funds. A gold-backed ETF constructed to today’s standards was introduced in 2003, first at the Australian Stock Exchange and later at the New York Stock Exchange. The initial three days of trading saw demand for ETF shares exceed the billion-dollar mark. Clearly, there was great potential for physically backed gold securities worldwide – including Europe. However, there was one problem.

Physically backed gold ETCs introduced in Europe in 2007

Under EU law, an ETF must offer a certain degree of risk diversification, such as an ETF on the German benchmark index DAX®. Gold ETFs therefore cannot be traded within the EU. The problem was solved by issuing gold-backed ETCs in the form of debt securities, and in 2007, Xetra-Gold was the first gold ETC to be launched in the Eurozone. According to the World Gold Council, with 1,315 tonnes of gold under management in ETCs (as at 25 October 2024), Europe now ranks second behind the 1,653 tonnes of gold invested in North American gold funds, but far ahead of other regions such as Asia, where approximately 200 tonnes of gold are managed in ETFs.