While the major market indexes in the U.S. were seeing red following the long Easter weekend, gold futures were seeing their highest levels in seven years per a MarketWatch report. With recession risks on the horizon following the coronavirus pandemic, this could keep the gold bulls pleased.
“Gold’s biggest stumbles during this crisis have been because investors were on a search for cash liquidity to cover losses and margin calls elsewhere, not because their attitude toward gold shifted,” said Christopher Louney, Analyst at RBC Capital Markets, in a note.
“Even as markets improve, whether temporarily or not, and investors come back, we think gold will also absorb inflows alongside other asset classes. Market participants are aware of the risks out there, and an asset like gold that we have long recommended as a risk overlay stands to receive ongoing support, and we think the firmest support is now at our high scenario,” said Louney.
Investors looking to get gold exposure can look at funds like SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.
Traders looking for leverage can use funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), VanEck Vectors Gold Miners (NYSEArca: GDX) and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).
A pair of other gold funds to look at:
- iShares Gold Trust (IAU): seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
- Aberdeen Standard Gold ETF Trust (SGOL): seeks to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
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