Gold’s demand drivers remained in the month of July, keeping prices afloat. However, for the rest of the year, gold’s ability to sustain its rally could hinge on demand from China.
According to data from the World Gold Council (WGC), the systemic risk of inflation was able to outweigh strength in the dollar, which led to a modest increase in gold prices for July. Wholesale demand for gold in China also contributed to the tepid rise, but the WGC noted that demand could amplify later in the year as the holiday season approaches. This helped to offset outflows in Chinese gold ETFs.
The central bank of China continued to purchase gold, extending its purchase streak to nine months. China added another 2 tonnes in gold during July to bring their total reserves to 2,300 tonnes. If that buying spree can continue through the rest of the year, that could help keep the bullish wind in gold’s sails.
2 Ways to Achieve Gold Exposure
If gold happens to dip, it can open opportunities for investors to capture exposure at cheaper prices. With gold over $3,000 per ounce, that may be out of reach for the majority of investors. However, gold funds and ETFs from Sprott can provide access. Two in particular to consider are the Sprott Physical Gold Trust (PHYS ) and the Sprott Gold Miners ETF (SGDM ).
First up, PHYS can provide convenient access to pure-play gold exposure. Furthermore, it also adds a greater degree of flexibility by allowing investors to convert their fund shares into physical bullion. This should appeal to investors who want to experience a more tangible investment feel. On the other side of that investment spectrum, shares of PHYS allow investors to avoid the logistics of storing physical bullion.
Another option potentially plays off the rise in spot gold prices via mining stocks. As gold demand rises, supportive services in the gold industry like mining and/or exploration may rise in tandem with the precious metal’s prices. Rather than create a portfolio of individual mining stocks, SGDM adds broad-based exposure without having to perform the perfunctory research to look for opportunities in the space.
Per its fund description, SGDM tracks the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large-cap gold companies that trade on Canadian and U.S. exchanges for additional country diversification.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub.
“Bullish” describes a market where prices are rising and expected to continue rising.
The Sprott Physical Gold Trust is generally exposed to multiple risks that have been both identified and described in the Prospectus. Please refer to the Prospectus for a description of these risks. This material must be preceded or accompanied by a prospectus. For an additional copy of the prospectus please visit https://sprott.com/investment-strategies/physical-bullion-trusts/gold/.
The Nasdaq Sprott Silver Miners Index tracks the performance of companies involved in silver production, exploration, and physical silver holdings. The Nasdaq Sprott Copper Miners Index tracks global companies engaged in copper production, exploration, and physical copper holdings. The Nasdaq Sprott Critical Materials Index tracks companies mining essential materials such as uranium, lithium, copper, and rare earths.
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Diversification does not guarantee profits or protect against losses in declining markets.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM SGDJ
