The expectation of rising interest rates is causing tailwinds behind a stronger dollar, leaving precious metals in the dust. However, gold-focused exchange traded funds (ETFs) have been seeing strength.
The second quarter saw assets in gold ETFs fall, but compared to its other precious metal peers, it actually fared quite well. Recession fears in the second half of 2022 could also push more investors back into safe haven assets like gold.
“Investors cut holdings in exchange-traded funds for silver, platinum and palladium in the second quarter on fears that a potential recession will reduce industrial demand, but gold assets held up because of its role as a haven, and that may persist,” a Bloomberg report noted.
“Gold-backed ETFs shrank by just over 1% in the three months through June, or 43 tons, after an 8% surge in the first quarter helped by Russia’s invasion of Ukraine, according to data compiled by Bloomberg,” the report added. “By contrast, silver holdings contracted almost 5%, and the outflow in tonnage terms was the biggest since 2011.”
A Physical Gold-Backed ETF to Consider
Rather than make a play on miners or gold futures, ETFs that focus on physical gold can give investors a more tangible feel of playing gold prices. One fund to consider for this level of exposure is the abrdn Physical Gold Shares ETF (SGOL ).
The fund seeks to reflect the performance of the price of gold bullion. Fund facts per SGOL’s fact sheet:
- Physically-backed: The trust holds allocated physical gold bullion bars stored in secure vaults.
- Transparency: The metal is held in allocated bars, and a bar list is posted daily on abrdn.com/usa/etf.
- Pricing: The metal is priced off the London Bullion Market Association’s specifications for Good Delivery, which is an internationally recognized and transparent benchmark for pricing physical gold.
- Vault location: Metal is held in Zurich, Switzerland, and London, England in a secured vault.
- Vault inspection: Inspectorate International, a leading physical commodity auditor, inspects the vault twice per year (including once at random).
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