As investors start to reorder their ETF rosters for 2021, they have to be looking at gold and wondering whether the precious metal can sustain its rally. If inflation remains a concern, then exposure to gold through ETFs like the VanEck Merk Gold Trust (OUNZ) will be key.

OUNZ has obviously been the beneficiary of a gold run this year and the numbers show. The fund is up 22% according to Yahoo Finance performance figures.

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.

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.

Given gold’s bull run this year, OUNZ has been staying above its 200-day moving average, but is starting to dip below its 50-day moving average. This could present a buying opportunity for short-term traders.

OUNZ Chart

Inflation Concerns

Getting gold exposure is even more important when you factor inflation into the mix. Per a Markets Insider article, “Goldman’s economics team forecasts a temporary bounce in inflation to 3% next year, which could help spur demand for gold.”

“In this cycle, we believe the gold market, at least initially, is likely to follow the same path as after the Great Financial Crisis and grow strongly into the recovery phase of the business cycle as inflation concerns become central to the forecast,” Goldman said.

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