The Omicron variant combined with low yields pushed investors away from bonds and into gold as the precious metal rose 1% higher last week.
Before the post-Thanksgiving downturn that saw the Dow Jones Industrial Average turn negative by over 900 points, gold was fluttering up and down the $1,800 price level. Caught in that seemingly perpetual holding pattern, it finally broke loose as investors scrambled for safety amid the sell-offs.
It’s not just the worries over the new COVID-19 variant that are spurring this demand for the precious metal. The U.S. Federal Reserve’s tapering of its stimulus measures is also causing markets to fret while yields start to rise.
“Gold is benefiting from a flight-to-safety as investor worries around a faster Federal Reserve taper and the COVID situation as both Delta and Omicron pose a risk to short-term growth outlook,” said Edward Moya, senior market analyst at brokerage OANDA. “Gold’s end of week performance is significant as it coincides with curve flattening that includes high expectations for a faster Fed taper.”
Can Gold Be a Green Machine?
Aside from being a store of value, a byproduct of gold investing is that it could provide environmental, social, and governance (ESG) exposure. In the form of gold bars, the precious metal leaves no carbon footprint, and more mining activities are starting to incorporate renewable energy sources.
“The emissions associated with holding gold are frankly a lot less than holding equities,” said Terry Heymann, CFO of gold trade-group World Gold Council, in a Barron’s article.
“You’re going to see a lot more use of renewables [at mines] — solar, hydro, or wind,” Heymann added. “Secondly, you’re going to see a move towards electric vehicles.”
If the prospect of owning gold bars doesn’t appeal to investors, but they still want gold exposure, then the Sprott Physical Gold Trust (PHYS) is worth a look. PHYS investors get easy access to gold exposure with the option to convert their ownership shares to physical gold, should they choose to do so.
PHYS invests and holds substantially all of its assets in physical gold bullion. It seeks to provide a secure, convenient, and exchange-traded investment alternative for investors who want to hold physical gold without the inconvenience that is typical of a direct investment in physical gold bullion.
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