Up 17% this year, the Perth Mint Physical Gold ETF (NYSEArca: AAAU) is among the ETFs meriting more attention in the gold fund conversation.
AAAU is the first gold ETF backed by a sovereign entity, the Government of Western Australia. The fund’s Custodian Gold Corporation, which trades as The Perth Mint, is 100% owned by the Government of Western Australia and the guarantee is explicitly stated in an Act of Parliament, the Gold Corporation Act 1987. The majority of the fund’s physical gold is vaulted by The Perth Mint, and its network of central bank grade vaults is the largest in the southern hemisphere and located in Western Australia, one of the world’s most geopolitically stable regions.
AAAU recently celebrated its first anniversary in style, highlighting the strength in the gold market this year and investors’ renewed affinity for bullion-based assets. The Perth Mint said AAAU recently topped 100,000 troy ounces in holdings and $150 million in assets under management.
AAAU ETF Methodology
Additionally, AAAU shareholders can choose to exchange shares for physical gold from The Perth Mint at any time to almost any location serviced by FedEx. The fund is the only US-listed ETF to vault gold in Asia versus the traditional centers of NYC and London. The ETF comes with a very competitive management fee of 0.18% per annum, and it minimizes potential tracking error to the gold price that currency conversion could allow.
AAAU could add to its upside as global central banks, including the Federal Reserve, mull more interest rate cuts.
Gold is believed by many investors to be inversely correlated with interest rates. Rising interest rates make bonds and other fixed-income investments more attractive so that the money will flow into higher-yielding investments, such as bonds and money market funds, and out of gold, which offers no yield at all during times of higher interest rates, and back into gold ETFs.
With gold’s recent strength and the yellow metal’s status as a safe-haven investment, analysts have recently been boosting price targets on the commodity. Some have even renewed calls for gold to hit $2,000 per ounce.
For more gold investing news and strategy, visit our Gold list page.