Is The Dollar Rally Real While Gold Takes a Breather?

A recent losing streak in the major U.S. indexes put the greenback into the spotlight once again while gold prices took a breather. Is the dollar rally for real or will gold regain its mojo?

“Since the pandemic really intensified in March, we’ve seen the dollar gain from bouts of risk-off. But really, those gains have not been long lasting,” said Brown Brothers Harriman’s Win Thin during CNBC’s “Trading Nation.” “The headwinds are building on the dollar and the U.S. economy. So, I think the recovery maybe gets pushed out into early 2021.”

Thin is taking into account the uncertainty surrounding more coronavirus cases and the fear of a second stimulus package not passing before the November election.

“The odds are falling precipitously,” he said. “We’re seeing softness in the U.S. economic data as the [current]stimulus runs out. To me, that’s all dollar negative.”

Meanwhile, investors looking to get gold exposure without holding the physical shares, but with the option to do so in the future, can look at the VanEck Merk Gold Trust (OUNZ). 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, and the Trust’s assets consist principally of gold held on the Trust’s behalf in financial institutions for safekeeping.

OUNZ Chart

OUNZ data by YCharts

OUNZ can offer investors the following:

  • 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.

As mentioned, one of the key benefits of OUNZ is the ability to exchange shares of the ETF for physical gold. Per the fund’s website, if you’re an “investor interested in taking delivery of physical gold in exchange for your OUNZ shares (Delivery Applicants), you must submit a signed Delivery Application to Merk Investments LLC.

For more market trends, visit ETF Trends.