2023 saw its fair share of geopolitical and macroeconomic forces that spurred market volatility. Market uncertainty in 2024 should persist, opening pathways for increased hedging, which should benefit gold and silver.
Gold prices jumped 12% within the past year as the dollar retreated on the expectation that inflation is starting to subside and rate-cutting would take place in 2024. Silver didn’t see the same strength as its more expensive counterpart, but still showed resilience amid a stock market comeback.
2024 should bring more market uncertainty in a presidential election year, while geopolitical factors around the globe continue to play out. That said, it’s an opportune time to get exposure to precious metals, especially given their historical performance whenever the economy is under duress.
“With growing global instability and an extreme overbought/overvalued U.S. stock market being priced for perfection, I expect Western generalists to begin looking at hedges that could prove worthy in riding out the coming storm – namely macro hedge funds, conservative growth funds, cash, and gold,” wrote mining sector investor David Erfle in Kitco News, adding that gold has “historically performed well during periods of severe economic stress, geopolitical risks, and in periods of either inflation, deflation, or stagflation.”
3 Paths to Exposure for Gold, Silver or Both
Investors looking to hedge their portfolios with gold exposure can use the Sprott Physical Gold Trust (PHYS). The fund provides an enhanced physical bullion structure. This structure offers the ease of purchase and sale that comes with being traded on a stock market exchange. Shares are redeemable for the precious metal bullion if the investor wants the feel of a more tangible investment.
To get the duality of silver’s use as a precious and industrial metal, investors can gain exposure via the Sprott Physical Silver Trust (PSLV). The fund provides exposure to the precious metal without the additional hassle of storing it. The fund invests in unencumbered and fully allocated London Good Delivery (LGD) silver bars. Like PHYS, shareholders can redeem their shares for physical bullion anywhere in the world (subject to certain minimum conditions).
For investors who also want to mix gold exposure with silver, there’s the Sprott Physical Gold and Silver Trust (CEF). This is a closed-end trust that invests in unencumbered and fully allocated physical gold and silver bullion in LGD bar form. CEF’s overall goal is to provide a secure, convenient, and exchange traded investment alternative for investors who want to hold physical gold and silver without the inconvenience typical of a direct investment in physical bullion.
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