Earlier this week, on Tuesday, the United States Federal Reserve Chair Jerome Powell’s testimony before the Congress indicated a tight monetary policy in the near term. Following the remarks of Powell, the greenback slipped 0.4%, and the U.S. 10-year treasury yields fell from their recent highs. As gold can be seen as a hedge against inflation, spot gold prices climbed 1% to $1,819.58 per ounce.
Billionaire ‘Bond King’ and CEO of the investment firm DoubleLine Capital LP, Jeffrey Gundlach, predicted that the economy would be more on recession watch than the past couple of years. He also expects about a 1.5% rate hike this year. Gundlach has a long-term bullish view on gold and a long-term bearish view on the dollar.
Therefore, the gold exchange-traded funds (ETFs) of SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and World Gold Trust - SPDR Gold MiniShares Trust (GLDM) might be solid investments.
SPDR Gold Shares (GLD)
GLD as an investment aims to reflect the performance of the gold bullion price, less the trust’s expense. The trust holds gold bars from time to time and has the objective of shares to reflect the price performance of the gold bullion. The trust can be used as a short-term position to hedge against equity market volatility and inflation.
Tracking the LBMA Gold Price PM ($/ozt) index, as of January 12, GLD had $57.16 billion assets under management. The fund has a gross expense ratio of 0.40%, lower than the category average of 0.44%. Over the past three years, its fund flows came in at $9.07 billion. GLD has a NAV of $170.12.
The ETF has gained 1.9% over the past month and 1.5% over the past five days to close yesterday’s trading session at $170.16. GLD has a beta of 0.09.
GLD’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall A rating, which equates to Strong Buy in our proprietary rating system. GLD has a Trade, Buy & Hold, and Peer grade of A. In the 39-ETF Precious Metals ETFs group, it is ranked #1. Click here to see the POWR Ratings for GLD.
iShares Gold Trust (IAU)
IAU offers exposure to gold by tracking the LBMA Gold Price PM ($/ozt) index. The trust is designed to track the spot price of gold by holding gold bars in a secure vault, providing investors with an option to free themselves from finding a place to store the yellow metal. The trust offers a valid choice for cost-conscious investors.
As of January 13, IAU had $28.76 billion net assets of the fund. Its sponsor fee stands at 0.25%, significantly below the category average of 0.44%. The trust’s fund flows came in at $11.29 billion over the past three years. It has a NAV of $34.62, as of January 13.
The trust has gained 1.6% over the past three months to close yesterday’s trading session at $34.65. It has gained 1.9% over the past month. IAU has a beta of 0.07.
It’s no surprise that IAU has an overall A rating, which translates to Strong Buy in our POWR Rating system. The trust has an A grade for Trade, Buy & Hold, and Peer. It is ranked #2 in the Precious Metals ETFs group. To see the POWR Ratings for IAU, click here.
World Gold Trust - SPDR Gold MiniShares Trust (GLDM)
GLDM has the investment objective of its shares reflecting the performance of the price of gold billion after deducting the trust’s expenses. Shares of GLDM are devised to provide investors with a cost-effective and convenient way to invest in gold.
The trust had $4.34 billion assets under management and a NAV of $18.09 as of January 13. GLDM has a gross expense ratio of 0.18%, considerably lower than the category average of 0.44%. The trust’s fund flows came in at $37 million over the past month and $459.54 million over the past year.
The trust has gained 1.7% over the past three months and 1.4% over the past five days to close yesterday’s trading session at $18.11.
GLDM’s promising prospects are reflected in its POWR Ratings. The trust has an overall rating of A, which equates to Strong Buy in our proprietary rating system. It has a Trade, Buy & Hold, and Peer grade of A. It is ranked #3 in the same group. One can see GLDM’s POWR Ratings here.
GLD shares were trading at $169.85 per share on Friday afternoon, down $0.31 (-0.18%). Year-to-date, GLD has declined -0.65%, versus a -2.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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