Gold to Cross the $2000 Mark? ETFs to Gain

Sweta Jaiswal, FRM

Co-chief investment officer Greg Jensen ofthe world’s biggest hedge fund, Bridgewater Associates, estimates that gold will touch the milestone of $2,000 an ounce (per a Financial Times article). The metal is expected to gain nearly 30% from its current $1550-an-ounce price level. It is worth noting that gold delivered an 18.9% return for 2019. Analysts believe that uncertainties surrounding the Sino-US trade war, global growth worries and geopolitical risks have been adding to the lure of the yellow metal.

Jensen believes rising political uncertainties and major central banks, especially the Fed, allowing higher inflation levels could lead to the upside in gold. In this regard, he said, “there is so much boiling conflict. People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.”

Gold, which is considered a great store of value and hedge against market turmoil, can continue to gain as investors will resort to safe-haven picks on rising inequal distribution of income in the United States and intensifying tensions with China and Iran.

Moreover, it is being believed that the phase-one trade deal will help improve trade conditions around the globe but the relief will be temporary. China will have to grapple with 25% tariffs on $250 billion worth of Chinese industrial goods and components that are used by manufacturers in the United States. The tariff-related issues are expected to be dealt with in the phase two of the trade deal (read: Phase-One Trade Deal to Boost These ETF Areas).

Gold ETFs to Shine

Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Trust ETF GLD, iShares Gold Trust IAU, Physical Swiss Gold Shares ETF SGOL, SPDR Gold MiniShares Trust GLDM and GraniteShares Gold Trust BAR are some of the popular ETFs. These funds have a Zacks ETF Rank #3 (Hold). Below we have discussed them in detail:

GLD

This is the largest and most-popular ETF in the gold space, with AUM of $43.95 billion and average daily volume of around 9.6 million shares. The fund reflects the performance of the price of gold bullion, less the Trust's expenses. Expense ratio is 0.40% (read: 10 Power-Packed ETFs to Buy for 2020).

IAU

This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has AUM of $18.22 billion and trades in solid volume of 20.1 million shares a day, on average. The ETF charges 25 bps in annual fees.  

SGOL

This product also tracks the price of gold bullion and is backed by physical bullion under the custody of JPMorgan Chase Bank. It has amassed $1.31 billion in its asset base and trades in volume of 890,000 shares per day. The product has an expense ratio of 0.17% (Gold Surges to 7-Year High: ETFs to Tap).

GLDM

This product seeks to reflect the performance of the price of gold bullion. Being one of the low-cost products with an expense ratio of 0.18%, GLDM has amassed $1.16 billion in AUM and trades in average daily volume of 1.3 million shares.

BAR

With AUM of $612.3 million and expense ratio of 0.17%, the fund tracks the performance of gold price. It trades in moderate volume of 200,000 shares per day, on average (see: all the Precious Metal ETFs here).

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Aberdeen Standard Physical Gold Shares ETF (SGOL): ETF Research Reports
 
SPDR Gold Shares (GLD): ETF Research Reports
 
iShares Gold Trust (IAU): ETF Research Reports
 
GraniteShares Gold Trust (BAR): ETF Research Reports
 
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
 
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