A vaccine rally has put gold investing on the backburner, but as prices for the precious metal start to steady themselves, look for the VanEck Merk Gold Trust (OUNZ) to regain its strength.

One thing gold investors are eyeing is inflation numbers.

“The gold market is seeing a steady rise and continues to hold healthy gains above $1,700 an ounce even as inflation pressures remain muted,” a Kitco News report said. “Wednesday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.4% in February, after a 0.3% rise in December. The data in line with consensus forecasts. For the year, the report said that headline inflation rose 1.7%.”

As for the fund, OUNZ seeks to provide investors with an opportunity to invest in gold through the shares and delivery of physical gold in exchange for those shares. Summarily, OUNZ offers investors:

  • Deliverability: VanEck Merk Gold Trust holds gold bullion in the form of allocated London Bars. It differentiates itself by providing investors with the option to take physical delivery of gold bullion in exchange for their shares.
  • Convertibility: For the purpose of facilitating delivery, Merk has developed a proprietary process for the conversion of London Bars into gold coins and bars in denominations investors may desire.
  • Tax Efficiency: Taking delivery of gold is not a taxable event as investors merely take possession of what they already own, the gold.

OUNZ Chart

Is Inflation on the Horizon?

Inflation fears sparked heavy volatility the past couple of weeks as Treasury yields started to tick higher.

“Economists and analysts note that weak inflation pressures could be a positive for gold as it recovers from its 10-month low at the start of the week,” the Kitco report said. “Analysts have pointed out the latest inflation data give the Federal Reserve some flexibility to provide more accommodative monetary policies.”

“Although gold prices are up, some analysts have said that for prices to push back to last summer’s all-time highs, the U.S. economy needs to see persistently higher inflation, which has been challenging to achieve as the economy continues to feel the devastating effects of the COVID-19 pandemic,” the report added.

“The real question is how hot prices run when the economy reopens and whether that’s a one-off or sustained,” said Adam Button, chief currency strategist at Forexlive.com.

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