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Gold-Related ETFs Are Outperforming the S&P 500

In the past month, the price of gold experienced a significant rally following a steep decline in late September into early October. The precious metal saw an increase of more than 9% during the last 30 days and is currently valued at just under $2,000 per ounce. This price rally was an encouraging sign for those with investments in the precious metal at the start of the fourth quarter.

Recent geopolitical developments have led to an uptick in levels of uncertainty around financial markets and led some investors to look for safe havens. During gold’s month of growth, the S&P 500 saw a dip in its performance posting a total return of -2.10% as of the last day in October, according to S&P Dow Jones Indices. The drop in the S&P’s performance over the past month could further nudge investors to look to asset classes like gold. The precious metal has historically been seen as a solid option during unpredictable times.

In this article, using data from LOGICLY, we will look at some of VanEck’s gold-related ETFs to see how the fund’s performance benefitted from the recent rally and look at how the funds have performed against the S&P 500 in the short-term and long-term.

See More: “Gold’s Price Continues to Move in a Positive Direction

A Unique Physical Gold ETF

With gold’s price on an upswing for almost the entirety of the start of Q4, funds like the VanEck Merk Gold Trust (OUNZ) that tracks the LBMA Gold Price PM Index benefitted greatly. It has posted nearly an 8% return quarter to date, outperforming the S&P 500 which has posted a 1.75% total return according to S&P Dow Jones Indices. OUNZ has outperformed the S&P 500 in the long term as well with the fund posting a nearly 22% return in the last year while the S&P 500 has posted a 19% return.

OUNZ is also the only ETF of this style that allows investors to redeem shares in the fund for actual gold.

See More: “Was October the Month of Gold?

Gold’s Rally Spread into Gold Miner ETFs

The VanEck Gold Miners ETF (GDX) and the VanEck Junior Gold Miners ETF (GDXJ)  both saw a jump in their performance during the precious metal’s price rally despite the two funds holding strictly mining companies. GDX has posted a 9.51% quarter-to-date return and nearly a 33% return in the last year. While GDXJ has posted a 10.08% return quarter to date, and a nearly 27% return in the last year. Both funds’ returns during this time frame reveal that much like OUNZ they have not only outperformed the S&P 500 during the precious metals price rally in the past month but also during the past year.

It’s important to remember that investing in this style of stock is an indirect way to get exposure to the precious metal. Although gold miner stocks tend to mirror the movements in the price of gold, they do come with equity risks and the risks that gold miners face.

With the precious metal’s price increasing by more than 9% in the past month, and three gold-related funds posting better returns than the S&P 500 thus far in Q4 and in the past year, more investors may start giving gold exposure another look, even if it is only for diversification purposes.

For more news, information, and analysis, visit the Beyond Basic Beta Channel.

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