As geopolitical tensions rise around the globe, capital markets are seeing a repatriation of gold. And the precious metal’s price continues to climb. So investors may also want to keep the metal close to home in their respective portfolios.
“You’re seeing this move from West to East, where historically speaking, a lot of Western countries have been countries were gold was stored. And this is now changing because of what happened with Russia and Ukraine, and the U.S. imposing sanctions on Russia," said Jonathan Awde, president and CEO of Dakota Gold Corp, in an interview with Quartz.
“A lot of countries are saying, all right, we’ve seen your playbook. We don’t want to have gold stored in other countries,” he added. "We want to have gold stored in our own country. So in case we have or do something that goes against your foreign policy, we don’t have our gold confiscated.”
This repatriation of gold was sparked by Russia’s invasion of Ukraine in 2022. In a 2023 survey by Invesco, per a Reuters report, sovereign wealth funds and central banks were forecasting more inflation as well as a rise in geopolitical tensions. This brought in more gold and a rise in central bank buying.
A confluence of these factors have in turn pushed gold higher. That’s allowed investors to rethink the addition of the precious metal in their portfolio.
Ideal Portfolio Diversification
The previous metal offers ideal portfolio diversification, and gold funds offer an ideal ingress to exposure. Sprott has a pair of funds where investors can benefit from the metal directly or indirectly via miners.
Investors can accomplish this by purchasing funds directly investing in gold bullion or gold miners for an indirect play. For the former, consider using the Sprott Physical Gold Trust (PHYS), which is a fund that provides an enhanced physical bullion structure, offering the ease of purchase and sale that comes with being traded on an exchange.
An alternate play on the metal’s prices via ancillary gold services like mining offers opportunities in the Sprott Gold Miners ETF (SGDM ). The ETF seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of larger-sized gold companies on Canadian and major U.S. exchanges.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
