Is the Downward Pressure on Gold Over? | Beyond Basic Beta Channel

Just when it seemed the U.S. dollar might make a comeback, gold has been back on a steady climb once again. But is the downward pressure over? The Covid-19 pandemic is still the wildcard, and stimulus talks will continue to feed into gold prices in the next week or so.

“Support comes from a weakening U.S. dollar index that hit a six-week low overnight. Weaker U.S. stock indexes in pre-New York trading are also aiding the precious metals bulls,” wrote Jim Wyckoff in Kitco News.

A major market mover has been the ongoing back-and-forth in the White House for a stimulus package. The markets will be kept in limbo until a tangible deal is in place.

“It now appears less likely the U.S. Congress and the Trump administration can come to agreement on a new Covid-19 stimulus package before the U.S. elections in less than two weeks,” Wyckoff added. “All sides are still in communication regarding getting some kind of a stimulus package for Americans, however. The U.S. Senate Republicans could stymie any deal that is agreed upon by the House and the Trump administration. Corporate earnings reports are also in focus at present.”

Gold Price in US Dollars Chart

ETF Gold Exposure with a Physical Option

ETF investors can look for gold exposure with funds like 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.

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.

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 (the Sponsor).”

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