With an election week underway, gold just may beat out both red and blue. The commodity is already seeing a strong year amid the pandemic and that could continue, but investors need to push through the volatility first.
“Well, investors should look past the elections already,” wrote Arkadiusz Sieron in an OilPrice.com article. “They matter less than many people believe. The 2016 presidential election is the best example of that. The price of gold indeed declined in the aftermath of Trump’s victory, but the downward trend was eventually reversed.”
“So, yes, you should be prepared for elevated volatility this week,” the article added. “After all, we are about to witness not only the elections but also the FOMC meeting and equally important economic reports, including the nonfarm payrolls. However, as I have repeated many times before, gold’s responses to geopolitical events are relatively short-lived. In the long run, what drives gold prices are the fundamental factors. And the fundamental outlook remains positive for the yellow metal. Both the monetary policy and the fiscal policy are extremely dovish. The public debt is ballooning, while the US dollar is weakening. The real yields remain negative.”
This all bodes well for gold ETFs like the VanEck Merk Gold Trust (OUNZ ). OUNZ seeks to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold in exchange for those shares. The Trust’s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust’s operations.
Each share represents a fractional undivided beneficial interest in the Trust’s net assets. The Trust’s assets consist principally of gold held on the Trust’s behalf in financial institutions for safekeeping.
OUNZ offers investors:
- Deliverability: VanEck Merk Gold Trust holds gold bullion in the form of allocated London Bars. It differentiates itself by providing investors with the option to take physical delivery of gold bullion in exchange for their shares.
- Convertibility: For the purpose of facilitating delivery, Merk has developed a proprietary process for the conversion of London Bars into gold coins and bars in denominations investors may desire.
- Tax Efficiency: Taking delivery of gold is not a taxable event as investors merely take possession of what they already own: the gold.
As mentioned, one of the key benefits of OUNZ is the ability to exchange shares of the ETF for physical gold. Per the fund’s website, if you’re an “investor interested in taking delivery of physical gold in exchange for your OUNZ shares (Delivery Applicants), you must submit a signed Delivery Application to Merk Investments LLC (the ‘Sponsor’).”