It’s that time of year again, as advisors and investors look at how they can harvest losses from their investments and reinvest the proceeds in the right funds and ETFs. Among those areas are gold ETFs and funds — while investors may still want gold in their portfolios, it hasn’t been the most straightforward year for those gold strategies. That’s why investors may want to tax loss harvest gold ETFs into physical bullion in the Sprott Physical Gold Trust (PHYS).
Gold is down slightly so far this year, with the S&P GSCI Gold index off by about 2.43% YTD. Some notable gold strategies like the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU) have borne some serious outflows this year, -$3 billion and -$1.8 billion YTD respectively. Gold miner ETFs have fared somewhat better, but some names like the VanEck Junior Gold Miners ETF (GDXJ) have seen some outflows, losing -$97 million in net outflows YTD.
That presents an opportunity in physical bullion. PHYS provides an enhanced physical bullion structure, offering the ease of purchase and sale that comes with being traded on an exchange. PHYS exclusively invests in London Good Delivery (“LGD”) physical gold bullion, held in custody by the Royal Canadian Mint, with no levered financial institution getting between unitholders and the Trust itself.
Trust units are also quite liquid for PHYS, and can be sold on any open trading day for the New York Stock Exchange or the Toronto Stock Exchange. PHYS has returned -1.6% over one month based on its NAV.
Gold may have dropped off relative to the yields available thanks to rising rates, but if the Fed’s signaled willingness to soften comes true early next year, bargain gold pickups now could offer real value down the road. For those investors still interested in gold but trying to tax loss harvest gold ETFs, PHYS might present the right opportunity.
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