Gold continues to surge and rising debt levels in the U.S. and elevated yields should help keep the precious metal bullish. Gold prices are already up over 30% for the year and could keep climbing.
“Not only have gold prices pushed to $2,800 an ounce, continuing their unstoppable rally, but they have also managed to hit new all-time highs even as bond yields remain relatively elevated,” Kitco News confirmed, noting that gold’s momentum comes amid rising yields on benchmark Treasury notes. Rising debt is also another concern, which could be bullish for gold.
“The question is, as U.S. debt continues to rise, what is the yield needed to attract new investors to the market?” said Ryan McIntyre, Managing Partner at Sprott Inc.. “I think we are in an early phase where investors are starting to get worried about U.S. debt. People are starting to wonder if there could be more inflation and more debasement of the currency.”
McIntyre made mention that the growth of debt is alarming despite the economy being relatively healthy. The U.S. Federal Reserve has the unenviable task of guiding the economy to a “soft landing,” but the risk of a recession is always present.
“What is going to happen when the U.S. economy falls into a recession?” McIntyre asked. “How much are they going to have to spend to kick-start an economy that is slowing? We are really testing the bounds of historic debt levels, and it is causing some investors to think twice.”
2 Ways to Get Gold Exposure
Sprott has options for investors looking to add gold exposure to their portfolios. One offers a flexible option while another allows for a backdoor play on rising gold prices via miners.
The Sprott Physical Gold Trust (PHYS ) allows gold exposure without the logistical requirements of storing the precious metal. For added flexibility and a more tangible investment experience, PHYS allows investors to convert their fund shares into physical bullion. This offers feasibility when it comes to adding the precious metal to diversify a portfolio and add gold as a store of value.
For mining exposure, consider using the Sprott Gold Miners ETF (SGDM ), which adds more broad-based exposure to miners, thereby eschewing overconcentration in one or more gold mining stocks. PHYS offers a pure play, while SGDM offers indirect exposure when comparing the two funds.
Alternatively, SGDM can build off demand for the yellow metal with its exposure to miners. The fund 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, providing added country diversification.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Past performance is no guarantee of future results. One cannot invest directly in an index. For the latest standardized performance and important risk disclosures regarding Sprott investment products, including each fund’s prospectus, which should be read carefully before investing, please review each product’s webpage by clicking on the corresponding ticker:
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
Physical Bullion: PHYS, PSLV, CEF and SPPP
