Risk off–risk on market sentiment throughout 2019 has helped drive a positive price trend for gold, according to the World Gold Council, but larger macro-economic shifts have influenced some of gold’s typical supply and demand chains–making for some shorter term price volatility marked with rallies and pullbacks.
These were just two insights shared on the recent webcast, What’s on the Horizon for Gold in 2020, that reviewed 2019 gold market highlights and outlook for 2020.
ETF Trends CEO Tom Lydon moderated the webcast, which featured George Milling–Stanley, Chief Gold Strategist, State Street Global Advisors; Alistair Hewitt, Director, Head of Market Intelligence, World Gold Council; and Juan Carlos Artigas, Director, Investment Research, World Gold Council.
Artigas highlighted that risks comes in many flavors, but gold is likely to keep shining brighter in 2020.
He pointed to global central banks face decelerating growth and a likely trend of lowering rates further.
“A decade long stock market rally with only temporary pullbacks has pushed stock valuations higher to levels not seen since the dot-com bubble,” he said. “Plenty of geopolitical and market uncertainty will likely continue to push on investor risk aversion through the first half of 2020, making gold and gold backed ETFs an attractive alternative for adding diversification and hedging risk.”
ETF investors who are interested in diversifying their portfolios with gold exposure now have a number of options to choose from. For example, the SPDR Gold Shares (NYSEArca: GLD), the most liquid and largest physically backed gold-related ETF on the market, has been the go-to ETF option for gold investments.
Investors have looked to GLD as a quick and easy way to gain exposure to gold price movements as they hedge against market risks, help protect their purchasing power in times of inflationary pressures or capitalize on increasing demand from the emerging markets with a growing middle-income class. In the current environment of ongoing global geopolitical uncertainties, political risks here at home and central banks cutting interest rates to bolster growth around the world, many are turning back to physical gold as a way to safeguard their wealth and purchasing power.
The World Gold Council and State Street Global Advisors also expanded on the gold ETF theme with another gold offering that provides the cheapest exposure along with a low share price to those investors seeking exposure to the yellow precious metal. The SPDR Gold MiniShares Trust (NYSEArca: GLDM) has a 0.18% expense ratio and was initially listed at a per-share trading price of 1/100th of an ounce of gold, as represented by the LBMA Gold Price PM (USD). The low cost gold ETF has quickly been attracting attention from buy-and-hold investors who are interested in the long-term benefits of incorporating a cheap gold investment in a diversified portfolio
GLDM’s strategy is identical to GLD – both are physically backed by gold bullion and are structured as grantor trusts. However, GLD’s price was 1/10th the price of gold in ounces at its inception while the Gold MiniShares ETF was priced at 1/100th the price of gold in ounces.