It may seem hard for the gold bugs to celebrate that gold was last seen down about 3% in dollar terms so far in 2019, but against the backdrop of what is happening in the global markets, gold investors actually have a lot to celebrate here. The World Gold Council has released its Global Demand Trends report for the first quarter of 2019, and it turns out that gold acquisitions from exchange-traded funds (ETFs) and similar investment vehicles were more than one-fourth of the level of central bank buying and that total global demand increased 7% to 1,053 tonnes in the first quarter.

Central banks added 145.5 tonnes of gold to their respective treasuries, the largest increase for the first quarter of any year since 2013. Before getting into the inflows of investment vehicles, note that the reason central banks dominate is because it is almost impossible for any non-governmental body to compete with the raw purchasing power of any one major central bank in the world.

ETFs and similar products added 40.3 tonnes in the first quarter, with inflows coming from the United States and Europe. Europe has been suffering from a return toward negative interest rates, so gold’s lack of a dividend and lack of paying interest suddenly shines as a safety-net investment.

Investment into gold bars and coins saw demand drop by 1% to 257.8 tonnes in the first quarter. The World Gold Council pegged China and Japan as the main contributors to that decline, with divestment in Japan being driven by profit-taking after the local price surged in February.

As far as the large contribution from U.S.-based ETFs, the World Gold Council said:

In value terms, those inflows were equivalent to $1.9 billion. But flows during the quarter were not just one way – there were notable monthly variations: chunky inflows in January (+71.4 tonnes) were partially offset by February outflows (-32.9 tonnes) while March was broadly neutral (+1.8t). Global assets under management grew almost 2% during Q1, to reach 2,482.8t (US$103.4 billion) by quarter-end.

To put this into context, the Federal Reserve has pledged to be patient on its interest rate changes going forward, after effectively hiking aggressively in 2018 to buy some insurance for whenever the next recession arrives. Since the end of the third quarter, the price of gold has dipped only marginally and was last seen at $1,270 per ounce. That is down from a peak of over $1,340 in February, but it’s also above the $1,200 per ounce mark seen last October.

The SPDR Gold Trust (NYSEARCA: GLD) is the largest gold ETF by far, with more than $30.7 billion in assets under management. The ETFdb.com gold bullion screener showed that the iShares Gold Trust (NYSE: IAU) is a distant second place with almost $12.2 billion in assets.

Perhaps even more impressive than the actual gold holdings higher is the gold mining and production ETFs. The VanEck Vectors Gold Miners ETF (NYSEARCA: GDX) owns companies that lead the world’s gold mining efforts, and it had nearly $9.2 billion in assets under management and was down just 2.7% so far in 2019. That is against a year-to-date drop of 7% for Barrick Gold Corp. (NYSE: GOLD), with close to a $22 billion market cap, and Newmont Goldcorp Corp. (NYSE: NEM,) falling about 10% so far this year and still being worth almost $25 billion. Both gold giants have recently closed on major mergers, and Wall Street sees higher returns ahead for each of the combined companies, more than 10% higher for Barrick and over 30% for Newmont.

It may seem hard to cheer a small drop in gold, but true gold bugs are strange characters. If you told speculators and investors at the end of 2018, after the worst fourth quarter and December’s negative performance in recent stock market history, that the S&P 500 would rise 17% or so in the first four months of the year to new highs and that interest rates were going to stabilize and flatten, some gold bugs would have assumed that gold was not really the best place to be. The World Gold Council addressed this as well:

Despite US stock markets generating their strongest quarterly returns in ten years, investor sentiment in Q1 was underpinned by the shifting stance of the Federal Reserve, which adopted a more neutral monetary policy approach. The concurrent shift in market expectations – from a predicted scenario of US rate rises to one in which rates stay unchanged over the remainder of this year – supported demand for gold-backed ETFs. And this more dovish outlook should underpin regional demand for the rest of 2019, although continued strength in the stock market would be a headwind.

It will be interesting to see how the gold bugs prepare and react ahead of the summer. It is broadly expected that some trade pact between the United States and China will be accomplished in the next 45 to 60 days. U.S. growth and corporate earnings have both held up far better than the pundits had projected throughout the entire first quarter of 2019, and global stock markets have posted incredible gains on the coattails of U.S. markets. Now we just have to see if Europe can avoid a recession.

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