Gold ETFs have picked up steam as geopolitical uncertainty has increased and stocks faltered earlier this summer.
Investment demand remains robust as an increasing number of institutional investors, sovereign wealth funds and central banks seek gold as a potential source of return and diversification to traditional stock and bond portfolios.
On the upcoming webcast (available live and on demand for CE Credit), An In-Depth Look Into Gold’s Resurgence and its Sustainability, George Milling–Stanley, Head of Gold Strategy at State Street Global Advisors, Juan Carlos Artigas, Director of Investment Research at the World Gold Council, and Alistair Hewitt, Director at the World Gold Council, will go over the drivers of gold’s performance and consider the outlook for gold for the rest of the year.
The SPDR Gold Shares (NYSEArca: GLD), the largest gold-related ETF on the market, has increased 12.3% year-to-date as Comex gold futures strengthened to $1,288.7 per ounce so far this year.
In a year of marked by stubbornly low interest rates, a weak U.S. dollar, depressed inflation and sudden bouts of uncertainty, the current macroeconomic environment has been favorable for gold.
We have witnessed an environment characterized by catalysts of event risk driven demand. Supporting the short-term demand for gold bullion in recent weeks, a number of events that benefited metals included geopolitical tensions with North Korea, political risk in Washington and dovish monetary policy commentary from both Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi.
Consequently, as we prepare for the rest of the year, investors should consider the various risks that could crop up and look for ways to hedge against the unknown, especially with U.S. equities looking pricey in an extended bull market.
Many have turned to gold-related ETFs, like GLD, as a quick and easy way to hedge against market risks with a hard asset that could better withstand the pressures. The ETF has been a go-to option for large traders, hedge funds and institutional investors seeking to capitalize on its large pool of liquidity and tight bid-ask spreads.
Related: Analyzing August Gold-Backed ETF Fund Flows
GLD holds gold bullion, which is kept in the form of London Good Delivery bars (400 oz.) and held by the custodian (HSBC Bank USA) in its London vaults. Some of the gold may also be held in the vaults of sub-custodians.
The ETF currently holds 862.6 metric tons or 27.7 million ounces of gold bullion in the trust, with a notional value of $35.6 billion.
Financial advisors who are interested in learning more about gold can register for the Thursday, September 28 webcast here.