On Monday, the Wall Street Journal reported that gold’s price has begun to swing upward following the tragic events that took place last weekend in Israel. The report also highlighted that “Like the U.S. dollar or Treasury notes, the metal is prized by investors for perceived stability in times of market turmoil.” In the same report, the Journal also noted the following: “The gain in gold prices came after bullion declined in nine of the past 10 sessions.”
According to Kitco, the price of gold per ounce on Friday prior to market close was valued at around $1,820. As of Wednesday afternoon, the price was above $1,887.
Uncertainty has been high at the global level and within financial markets this year, to which recent events have only added. This is the kind of environment in which investors tend to look for exposure to physical gold as it offers diversification to a portfolio and is often seen as a way to preserve wealth. However, exposure to gold mining companies can also provide a possible opportunistic place for investors to allocate funds when looking for exposure to this precious metal.
VanEck offers a trio of ETFs that can give investors exposure to both physical gold and gold mining companies.
See More: “Millennial Investors Like Gold”
Physical Gold ETF
With gold’s price on an upswing, an ETF offering direct exposure to gold’s price could hold some appeal. The VanEck Merk Gold Trust (OUNZ) tracks the LBMA Gold Price PM Index, which also underlies several of the other physical gold ETFs on the market. However, OUNZ is unique among its peers in the ETF space because investors can trade their shares in the ETF for actual physical gold.
Its expense ratio of 0.25% is nearly 20 basis points cheaper than its ETF Database category’s average. In terms of performance, OUNZ has posted a 0.06% year-to-date return and an 11.17% return in the last year. Over the shorter term, the fund has a 1.81% return YTD, and a 0.67% return month to date.
See More: “How to Gain Inverse Exposure to Gold Miners”
Gold Miner ETFs
VanEck also issues products offering exposure to gold producers rather than the metal itself. The VanEck Gold Miners ETF (GDX) is the largest gold miners ETF on the market. GDX has an AUM of nearly $11 billion and an expense ratio of 0.51%. It tracks the NYSE Arca Gold Miners Index, which gives investors exposure to large-cap companies in the gold mining space. Gold miner stocks tend to reflect movements in the price of gold but with more volatility.
This fund has underperformed global equities year to date and the 12-month period ended October 10. It has a month-to date return of 3.34%, outperforming the global market..
The issuer also offers the VanEck Junior Gold Miners ETF (GDXJ), which tracks the MVIS Global Junior Gold Miners Index. This index follows small-cap companies in the gold and silver mining space. Small-cap gold miner equities can be more volatile than their large-cap counterparts but also can provide more growth potential.
The fund has an expense ratio of 0.52% and an AUM of more than $3 billion. Much like GDX, GDXJ has underperformed YTD as well as over the past 12 months. While it is trailing GDX month to date, it also has outperformed the broader market.
The fallout from the violent Hamas attack on Israel last weekend is still unfolding and could fuel investors’ desire to access an asset class that can hedge against market chaos. The trio of ETFs from VanEck discussed in this article offers multiple angles on getting exposure to gold’s performance.
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