As the capital markets prepare themselves for a post-coronavirus world, traders are betting on a slow recovery, which could continue to boost gold prices for some time. Also, the prospect of negative interest rates is feeding into a weaker dollar.
“It appears a safe-haven bid has returned to the precious metals amid changing marketplace notions regarding the pace of economic healing after the Covid-19 pandemic has subsided,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily commentary.
“Traders and investors are assessing the markets ramifications of a very possible ‘second wave’ of the Covid-19 pandemic as major global economies start to reopen their businesses and transportation infrastructure,” Wykoff added. There is a growing sentiment that economic recoveries, which had been factored into current market prices though solid rallies in many global stock indexes, will be “slower than initially expected.”
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.
A few other gold-backed funds to consider:
- GraniteShares Gold Trust (BAR): seeks to reflect generally the performance of the price of gold. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold.
- Perth Mint Physical Gold ETF (AAAU): seeks to provide investors with an opportunity to invest in gold through shares, and have the gold securely stored by the Custodial Sponsor; reflecting the performance of the price of gold less the expenses of the trust’s operations is the secondary consideration. The trust holds London Bars and Physical Gold of other specifications without numismatic value. It receives gold deposited by Authorized Participants in exchange for the creation of Baskets and delivers gold to Authorized Participants in exchange for Baskets surrendered to it for redemption.
- VanEck Merk Gold Trust (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.
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).
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