This isn’t a fool’s gold market given the latest rally by the precious metal. In fact, 2020 could be a golden year for exchange-traded fund (ETF) investors adding gold-backed funds to their portfolios.
“Gold inflows into global exchange-traded funds are on pace for a yearly record, said BMO Capital Markets, and the demand is significant since investors tend not to exit quickly should prices turn south. Colin Hamilton, Commodities Analyst with BMO Capital Markets, commented that the strong ETF demand has helped boost gold prices at a time when jewelry demand has been unusually weak,” a Kitco News report noted. “The ETFs trade like a stock but track the price of the commodity, with metal put into storage to back the shares. Inflows for the year to date are around 450 metric tons, Hamilton said.”
“Moreover, unlike retail demand, we see these purchases as relatively insensitive to prices,” he said. “This year is on course to mark a record for annual ETF inflows, which in our estimates currently make up over a third of global gold demand for the first time.”
For investors who don’t want to miss this golden opportunity, here are a few gold-backed ETFs to consider:
- GraniteShares Gold Trust (BAR): seeks to reflect generally the performance of the price of gold. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold.
- Perth Mint Physical Gold ETF (AAAU): seeks to provide investors with an opportunity to invest in gold through shares, and have the gold securely stored by the Custodial Sponsor; reflecting the performance of the price of gold less the expenses of the trust’s operations is the secondary consideration. The trust holds London Bars and Physical Gold of other specifications without numismatic value. It receives gold deposited by Authorized Participants in exchange for the creation of Baskets and delivers gold to Authorized Participants in exchange for Baskets surrendered to it for redemption.
- VanEck Merk Gold Trust (OUNZ): seeks to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold in exchange for those shares. The Trust’s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust’s operations. Each share represents a fractional undivided beneficial interest in the Trust’s net assets. The Trust’s assets consist principally of gold held on the Trust’s behalf in financial institutions for safekeeping.
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