Market uncertainty is still reigning in the capital markets as a number of economies have yet to still operate at full capacity thanks to the Covid-19 pandemic. As such, precious metals like gold could continue to soar to higher heights with gold surpassing the $3,000 price level.
“Since 1968, when gold was $35 per ounce, the drivers of gold bull markets have fallen into two categories: inflationary and deflationary,” said Jo Foster, Portfolio Manager for VanEck’s Gold funds, in an email. “We don’t see inflation spiking anytime soon, so we believe this to be a deflationary cycle. Both recent deflationary gold bull markets suggest that a price of over $3000 per ounce is reasonable. In fact, if one measures the start of this bull market from the 2015 lows, then it appears similar to the 2001-2008 bull market when gold rose over 200%.”
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 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 (the “Sponsor”).
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