With all the market uncertainty swirling, gold prices have remained resilient. Still, there are enough macroeconomic and geopolitical forces that could sway the precious metal in one direction or the other.
Gold prices are up about 10% for the year, but have stayed relatively flat the past month, potentially reaching an inflection point. FX Street noted that gold prices should remain bullish behind forthcoming rate cuts by the U.S. Federal Reserve as well as ongoing geopolitical tensions.
Gold is coming off a strong February, primarily driven by demand for safe haven assets. Another notable driver was a spike bullion demand from gold-back ETFs.
“The Trump administration’s policy-induced uncertainty, combined with rising inflation expectations and diminished consumer confidence, weighed on major stock indexes, further boosting gold’s appeal as an alternative investment and portfolio diversifier,” noted Imaru Casanova, Portfolio Manager for Gold and Precious Metals, and Gold Strategist Joe Foster. “A key factor behind gold’s latest rally was a surge in the holdings of gold bullion-backed ETFs. Total known ETF holdings of gold increased by 2.49% in February, marking the largest monthly inflow since March 2022.”
Gold-focused equities, particularly miners, have benefitted from this rise.
“The NYSE Arca Gold Miners Index (GDMNTR) gained 2.01% in February, performing significantly better than the broader equity markets, but ultimately falling short of matching the metal’s gains,” Casanova and Foster added further. “However, year to date, gold equities have demonstrated relatively strong leverage to gold prices, rising 17.22% compared to bullion’s 8.89% gain.”
Get Bullion or Mining Exposure
Given the in bullion and miners, investors will want to consider getting exposure via the Sprott Physical Gold Trust (PHYS ) and the Sprott Gold Miners ETF (SGDM ).
PHYS offers easy access to pure-play gold exposure through its fund, but it also adds some degree of flexibility by allowing investors to convert their fund shares into physical bullion. With exposure to gold via funds, investors avoid the logistics of storing gold, but can convert their shares to bullion if they want a more tangible investment feel.
Another option for exposure is via miners. As demand for the metal rises, supportive services in the gold industry like mining can also exhibit bullishness. Rather than choosing individual mining stocks, SGDM adds broad-based exposure to miners. That eschews the overconcentration risk inherent in shares of single companies.
SGDM seeks investment results that correspond generally to the performance of 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 more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Disclosure Information
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.
Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal. A “bull” market is one in which prices are rising.
Past performance is no guarantee of future results. One cannot invest directly in an index.
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
