Gold is continuing its climb, breaching the $2,600 mark recently. It looks well on its way past $2,700. Ryan McIntyre, managing partner at Sprott Inc., envisions gold exceeding $3,000.
The precious metal is already up 30% for the year, even outpacing the S&P 500 as rate cuts loom. The pace at which rate cuts come could signal low confidence in economic growth by the Fed. If that’s the case, then the macroeconomic environment further supports the investment case for the metal.
“U.S. sovereign debt remains the biggest existential threat to the economy. The last thing the Federal Reserve wants is a recession, because that would really blow out the deficit,” said McIntyre via the Kitco News report. “This is the perfect environment for gold, as the Fed’s bias is clearly to the downside. Gold remains the simplest asset to own to protect your wealth and capital.”
Furthermore, the effects of a rate cut won’t be instantaneous. Economic growth could continue to trend downward before it catches up with the Fed’s easing.
“There are extreme asset valuations in many different categories, and I think gold is a logical alternative. Even with the rate cut, the economy is not out of the woods yet. I guarantee there are going to be things that happen that we are not talking about today,” McIntyre added.
Get Physical or Mining Exposure
With momentum behind the yellow metal, Sprott has a pair of fund options for exposure. One focuses on the physical metal while the other leverages the benefits of miners.
For those looking for easy ingress to exposure to the precious metal, consider using the Sprott Physical Gold Trust (PHYS ) and the Sprott Gold Miners ETF (SGDM ). PHYS offers a pure play, while SGDM offers indirect exposure via miners.
PHYS adds a more tangible investment experience. The fund allows investors to have the option of converting their PHYS shares into physical bullion. This offers feasibility and flexibility when it comes to adding the precious metal to diversify a portfolio. Likewise, they can retain their shares of PHYS and still get exposure to the metal without having to store the physical commodity.
Alternatively, SGDM can build off demand 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.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
