October's Gold Rally Pushes It Past Stocks

The S&P 500 falling into correction territory has allowed gold to prosper amid a safe haven scramble as higher-for-longer interest rates and geopolitical risks continue to keep investors on edge.

[The precious metal] is officially outperforming the S&P 500 stock index in 2023 due to an October rally that has brought the price of an ounce of the yellow metal to the cusp of the $2,000 mark, a level it hasn’t seen since May,” reported MarketWatch.

The bottom hasn’t quite fallen out of stocks. Some analysts note that the recent stock sell-off hasn’t quite been fast and furious, but more of a slow roll.

“It’s been a bit of a slow-motion sell-off,” said Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, via  a Financial Times report. “Sentiment is generally negative . . . [but]stress metrics haven’t moved that much, it’s been relatively orderly.”

Furthermore, gold’s recent strength is evident in the S&P GSCI Gold Index recently ousting the S&P 500 in terms of year-to-date gains. The final weeks of July saw the S&P 500 rise almost 20%, which was more than double the gold index. The precious metal’s recent price gain now gives the edge to the S&P GSCI Gold Index.

^SG5C Chart

^SG5C data by YCharts

2 Options for Exposure to the Precious Metal

Some investors may not want the logistical challenges of storing the precious metal. However, they may want to retain the option to do so in case they change their minds in the future. That said, these investors may want to consider 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.

An alternate play on rising gold prices is through ancillary services like mining companies, or more specifically, 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 mining companies on Canadian and major U.S. exchanges.

For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.