Amid fears inflation could prove stickier than previously hoped, gold is one of 2024’s best-performing assets. The largest physically backed ETF dedicated to the metal is up almost 14% year to date.
Some market observers believe bullion’s newest bull market remains in its infancy. This indicates opportunities could await with other ETFs. That includes the WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN ). Actively managed, the fund provides investors with a best-of-both worlds approach. That’s because it features exposure to both gold futures contracts and shares of precious metals miners.
GDMN’s methodology defrays some of the risk associated with gold mining stocks. Those can lag even when spot prices of the metal rally. Fortunately, those equities are waking up. That’s highlighted by a 15.32% gain over the past month for the widely followed NYSE Arca Gold Miners Index. Over that same span, GDMN is up nearly 20%. That proves there’s efficacy in the marriage of gold futures and miners under a single umbrella.
GDMN Has Tailwinds
In what could be another positive spark for GDMN, Bank of America on Tuesday boosted its year-end gold price target, citing factors such as buying by Chinese investors and the possibility that the Federal Reserve and other central banks will lower interest rates this year.
Bank of America is also constructive on select gold mining equities, including Agnico Eagle Mines Ltd. (AEM) and Alamos Gold (AGI), both of which are members of GDMN’s roster.
“North American gold producers have traded between 1 and 2 times NAV [net asset value] with 1.75-2.0 times being accorded to the organically growth-oriented gold producers such as AEM,” noted analyst Lawson Winder.
Additionally, as gold mining equities have lagged spot prices over much of the past year, but as the aforementioned recent performance of the NYSE Arca Gold Miners Index confirms, that scenario is changing.
It could also be worth noting that mining equities can act as diversification tools to complement gold futures exposure. And those stocks can overshoot spot prices once they get going.
“What would give us confidence in further upside for gold miners? First off, it’s all about gold prices continuing to rally. And given the strength in precious metals including gold and silver, as well as other strong trends in charts like copper and crude oil, we feel this is part of a broader advance for the commodity space,” reported David Keller for CNBC.
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