The fourth quarter has seen a strong performance from gold. In early October, the price of gold stood at $1,820 per ounce, according to Kitco, and looked as if it would continue to drop in value as it had done the previous five months.
Instead, the precious metal flipped the script completely, spiking up to $2,040 according to Kitco. That puts it within spitting distance of its record high.
In addition to its recent growth, in an article put out by Kitco discussing the recently published 2024 “Metals and Mining Outlook” from Bank of America, the author shares that strategists with BofA think that if the Fed cuts rates before the second quarter, “gold could finish 2024 at $2,400 per ounce,” demolishing the previous record by hundreds of dollars.
For investors looking to position themselves to benefit from this possible outcome, a gold ETF can be a compelling investment choice. In this article, we examine a unique physical gold ETF and its recent performance.
See More: “Gold’s Price Continues to Move in a Positive Direction”
VanEck Merk Gold Trust (OUNZ)
The VanEck Merk Gold Trust (OUNZ) offers direct exposure to the price of gold. It tracks the LBMA Gold Price PM Index, which also underlies several other physical gold ETFs on the market. The fund is nearing its ten-year anniversary, having launched in May 2014.
OUNZ has an expense ratio of 0.25%, which is nearly 20 basis points cheaper than its ETF Database category’s average. In terms of flows, the $741 million fund has added nearly $90 million in new assets YTD, according to LOGICLY. The fund also separates itself from other similar funds on the market because investors are able to redeem their shares in this ETF for actual gold.
In terms of performance, OUNZ has posted a 10.23% return YTD, and a 9.00% return quarter to date. When looking at the fund’s long-term performance, it is up 15.56% over the past year and recorded a 10.23% annualized return in the last five years according to LOGICLY.
OUNZ’s returns in the quarter to date and in the last year outstripped those of the S&P 500 during the same periods. According to S&P Dow Jones Indices in Q4 of 2023, the index had a return of 6.12% and in the last year, it has returned 13.02%.
See More: “Gaining Global Exposure to Gold Miners“
Gold Miners Also Rally
As gold’s price rallied in the fourth quarter, two of VanEck’s gold miner funds also saw even greater gains, with the VanEck Gold Miners ETF (GDX) posting a 10.70% return quarter to date and the VanEck Junior Gold Miners ETF (GDXJ) posting a 13.65% return at the same time. While these funds don’t directly track the price of gold, they do provide indirect exposure to the precious metal via equities.
If gold continues to rally, as Bank of America’s analysts expect, investors could take a greater interest in the commodity as well as the ETFs that are linked to it.
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