Uncertain times in the capital markets call for a dash of portfolio certainty–something that gold can provide. With the strength of the dollar weakening and an economy still trying to pull itself out of the effects of the Covid-19 pandemic, gold is a suitable safe haven with ETFs like the iShares Gold Trust (IAU).
IAU seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities.
The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
Per the fund’s website, IAU provides investors with:
- Exposure to the day-to-day movement of the price of gold bullion
- Convenient, cost-effective access to physical gold
- Use to diversify your portfolio and help protect against inflation
“The fundamental picture for precious metals has never been better,” wrote AG Thorson in FX Empire. “Governments worldwide have committed to suppressing interest rates and printing money to solve their debt problems. Eventually, they will be forced to default or devalue – it is that simple!”
With U.S. President Donald Trump testing positive for coronavirus, it only adds to the uncertainty, especially with an election forthcoming. Despite these challenges, the bullish sentiment is still permeating through to some gold analysts.
“The Trump news trumps everything else – economic data, the stimulus package, etc.,” said Phoenix Futures and Options LLC president Kevin Grady, in a Kitco News report. “Gold pulled back a bit. But with all the money out there, the yellow metal should be higher. There are a lot of speculators in the gold space right now. They are pushing the market lower.”
As far as predictions on where gold prices will go from here, the Kitco report noted that “gold seems to be stuck as it trades around the $1,900 an ounce mark, Grady told Kitco News on Friday. The Trump’s coronavirus news should push people towards gold due to increased uncertainty, but since gold is currently trading in tandem with stocks, a lot depends on market reaction to next week’s developments, Grady explained.”
“Gold and stocks are trading together. There is going to be a lot of uncertainty, and there is a risk that investors will choose to liquidate their positions just to protect themselves in case something bad happens over the weekend,” he said.
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