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Gold funds have become the 'gorilla' of the ETF market

Investors can't seem to get enough of gold this year.

As gold has seen its best start to the year since 1974, exchange-traded funds that track the metal have surged in popularity. According to Stacey Gilbert of Susquehanna, long unlevered gold ETFs have already seen $7.3 billion in inflows this year.

"It is definitely a fan favorite this year," Gilbert said Thursday on CNBC's "Power Lunch." "Just to put in perspective of when we've seen those flows in the past — two months into the year — it was 2009."

The most popular gold ETF, GLD, has grown by $5.5 billion this year, according to ETF.com data. That's more than twice the net inflows seen by the second-most popular ETF, iShares MSCI USA Minimum Volatility (USMV).

"It's the gorilla right now," commented Christian Magoon, CEO of ETF-launching company Amplify Investments.

Demand for gold has been so strong that new shares of the iShares Gold Trust fund (IAU) were suspended temporarily from being issued in March. In February, IAU saw its largest creation activity in a decade.

Contributing to the recent run to safe-haven gold have been concerns over economic weakness and a global stock market rout. But even as U.S. stocks have rallied greatly off this year's lows, Max Wolff of Manhattan Venture Partners said the prospect of negative interest rates has also sent investors flocking to gold assets.

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"They're running to wherever they can because zero looks better than a loss, and some of that money is being forced into gold," Wolff said Thursday in a "Trading Nation" segment. "I'd be very cautious about buying it here, but if it sells off a bit, I'd get back in."

Gilbert, Susquehanna's head of derivative strategy, said the options market is signaling more likelihood of a big move higher for gold than a big move lower, as options traders remain more bearish on the broader stock market.

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While gold prices may see some pullbacks as investors cash out their profits, Gilbert said the flows into gold ETFs haven't yet notably slowed.

"Last week we really started to see the rotation out of U.S. Treasurys into what we call the safety products. We haven't seen that yet in gold," Gilbert said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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