The Federal Reserve’s recent rate cut of 25 basis points could amplify gold’s current rally. Prices have already broken through the $3,700 price mark, and another record high could hinge upon how aggressive rate cuts will be in the coming months.
“Political pressure is mounting for deeper cuts,” said Sprott Asset Management market strategist Paul Wong in a precious metals report ahead of the Fed announcement. “If these cuts occur while inflation remains elevated, real interest rates could decline, an environment historically favorable for gold.”
Tariffs continue to remain a wild card, as the Supreme Court weighed in on U.S. president Donald Trump’s tariffs recently. Two federal courts deemed the recent tariffs on imported goods as illegal, causing further market uncertainty that bodes well for gold.
“In our view, gold prices are poised to resume their upward momentum and move significantly due to a confluence of macroeconomic and political dynamics,” Wong added. He noted that one of the primary drivers is inflation risk stemming from tariffs. “With tariffs taking effect, the cost of goods is expected to rise, especially as post-tariff inventory reaches consumers. This inflationary pressure typically boosts demand for gold, which serves as a hedge against purchasing power erosion.”
Get Gold Exposure Two Ways
As the bullish case for gold continues to build, Sprott has a couple of ways to get exposure: the Sprott Physical Gold Trust (PHYS) and the Sprott Gold Miners ETF (SGDM).
For those looking for pure-play gold exposure, PHYS may be an ideal choice for those who don’t want the logistical challenges associated with storing physical gold. Shares of PHYS are traded on an exchange for easy access. However, the fund also adds a degree of flexibility by allowing investors to convert their fund shares into physical bullion.
SGDM offers an indirect play on gold exposure via miners. As demand for gold rises, supportive services in the gold industry like mining can also benefit from the increase in prices. Often, they can make a latent push to the upside after gold’s prices have already moved higher.
SGDM seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large-cap gold companies that trade on Canadian and U.S. exchanges. Rather than build a portfolio of individual mining stocks, SGDM adds broad-based exposure that mitigates the overconcentration risk inherent in shares of single companies.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub.
The Sprott Physical Gold Trust is generally exposed to multiple risks that have been both identifed and described in the Prospectus. Please refer to the Prospectus for a description of these risks. This material must be preceded or accompanied by a prospectus. For an additional copy of the prospectus please visit https://sprott.com/investment-strategies/physical-bullion-trusts/gold/.
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
“Bullish” refers to a positive outlook where an investor believes that a stock, sector, or the overall market will rise in value.
Diversification does not protect against the risk of loss, including the complete loss of invested principal.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM, SGDJ, SLVR, GBUG, METL
Physical Bullion Funds:PHYS, PSLV, CEF, and SPPP.
Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal.
