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British gold-backed ETC RMAU defies the market and sees 133% growth so far in 2022

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(Kitco News) - The gold market has struggled to attract investment demand as prices have been in a sharp downtrend through most of 2022; however, one U.K.-based gold fund has seen extraordinary growth so far this year.

Thursday, HANetf said its Royal Mint Responsibly Sourced Physical Gold ETC (LSE: RMAU) has seen its assets undermanagement rise to $650 million, increasing more than 133% so far this year.

"These inflows are particularly significant, given the gold spot price's recent negative performance. In September and October, the gold price fell by -4.48%, but RMAU received over $75 million in inflows, outpacing the other gold ETCs," said Hector McNeil, co-CEO and co-Founder of HANetf, in a statement.

The inflows into the gold fund came as the U.K. economy experienced significant volatility. In September, the ruling Conservative party voted for Liz Truss to replace Boris Johnson as Prime Minster. Truss' leadership ended 50 days later after her proposed economic plan of unfunded tax cuts on the wealthy roiled the British bond market and caused a historic drop in the pound.

Market turmoil has settled since Rishi Sunak was voted in as the third Prime Minister in as many months.

While RMAU could have benefited from some of that market volatility, McNeil said in a statement to Kitco, that interest in the fund is being driven by several factors, even as the broader market has struggled in the face of rising U.S. interest rates and a U.S. dollar at a 20-year high.

"We believe the longer-term investment case for gold remains intact. Gold is a diversifier; it is less volatile than equities and does offer inflation protection. With the world facing such uncertainty, we believe those features will drive demand for gold, the current headwinds aside," he said.

BCA Research is getting long gold as central bank gold demand supports higher prices

McNeil added that another factor that is helping RMAU outperform the broader gold market is because of its positive ESG attributes, a growing trend among investors. The gold held by RMAU in British Mint vaults is entirely responsibly sourced.

"The ETC is 100% backed by London Bullion Market Association (LBMA) Post 2019 responsibly sourced Good Delivery bars, meaning that the gold adheres to the highest responsible sourcing standard within the industry," said McNeil. "But crucially, a portion of those bars are cast from 100% recycled gold, which is sourced from scraps in the manufacturing process. With recycled gold roughly 90% less carbon intensive than mined, this has clear appeal to the growing number of investors seeking sustainable investment solutions."

HANetf's gold investment slightly differs from traditional exchange-traded funds. The ETC is structured as debt securities and the gold serves as collateral for the note.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.