Gold futures in July notched their highest gain in four months. Investor optimism surrounding fewer rate hikes by central banks and the prospect of a weaker U.S. dollar pushed the precious metal higher. Higher futures prices came despite central banks around the world unloading their gold reserves, according to Bloomberg. Gold prices for the year haven’t been fazed by this latest round of central bank selling. In fact, they’re up almost 6.5%.
“In a turnaround that’s already taken it from one of the world’s biggest gold buyers to a top seller this year, Kazakhstan’s central bank is looking to cut the metal’s share to as low as half of its $34.5 billion reserves,” Bloomberg reported.
“Alongside its counterparts in Turkey and Uzbekistan, the National Bank of Kazakhstan has emerged among the institutions that have contributed to a second straight quarter of decline in bullion purchases from central banks, whose buying accounted for nearly a quarter of global gold demand last year,” the report added further.
3 Options for Gold Exposure
Central bank purchases may push the price of gold lower. If so, this could create an area of value for investors to purchase the precious metal. Investors can accomplish this by purchasing funds directly investing in gold bullion or gold miners for an indirect play.
For the former, consider using the Sprott Physical Gold Trust (PHYS), which is a fund that provides an enhanced physical bullion structure, offering the ease of purchase and sale that comes with being traded on an exchange. For the latter, an alternate play on gold prices via ancillary gold services like mining offers opportunities in the Sprott Gold Miners ETF (SGDM).
The ETF seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of larger-sized gold companies on Canadian and major U.S. exchanges.
Lastly, investors can also consider the Sprott ESG Gold ETF (SESG). The fund provides transparency on the provenance of its gold by sourcing gold produced from select mines in North America.
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