When the U.S. dollar loses value, it creates a ripple effect across markets around the world. The prices of some things go up. Some go down. And it almost always creates increased demand for safe-haven investments like gold ETFs.
Now, some courageous investors see a weakened dollar as a time to jump into the markets because it’s shown to lead to a median 2.6% bump in the S&P 500. But when a weak dollar is paired with market volatility, it will almost certainly create a boon for gold bugs.
But again, it’s not just good for those investing in physical gold (which recently hit a record high). It also pushes up the value of gold stocks. And more specifically, gold ETFs.
If you’re not familiar with exchange-traded funds (ETFs), you can check out that link.
But those already familiar with these tax-efficient products have been piling in at a breakneck pace. And for good reason. Inflows into gold-backed ETFs saw a seven-fold year-on-year increase in the first quarter of 2020.
And since then, global gold ETF holdings have hit a new all-time high of 3,621 metric tons, according to the World Gold Council. Collective holdings of gold ETFs now exceed the on-the-books gold reserves of every country in the world except for the U.S.
Increased holdings, rising prices, market volatility and the sagging value of the dollar have led to a groundswell of interest in gold-backed ETFs. But that doesn’t make every gold ETF a good investment…
Portfolio-Stabilizing Gold ETFs
Here are four of the most sound gold-backed ETFs to consider for the remainder of 2020. You’ll also find a bonus gold ETN below.
No. 1: SPDR Gold Trust ETF (NYSE: GLD)
At one point, this was the largest ETF in the world. While it’s since fallen from that top spot, it remains the largest and most popular gold ETF out there. It’s sort of the “gold standard” of gold-backed ETFs. And it’s performing right on pace with the precious metal of the year.
This ETF echoes the performance of gold bullion, with each share representing roughly 10% of the price of an ounce of the shiny metal. And the shares are backed by actual gold bars kept in a secure vault. So this gold ETF makes for a cost-effective way of getting some indirect exposure to everyone’s favorite safe-haven investment.
No. 2 Aberdeen Standard Physical Gold Shares ETF (NYSE: SGOL)
This gold ETF recently caught the eye of momentum investors after it hit its 52-week high. And the Federal Reserve’s continuing to print money while otherwise remaining on autopilot makes for a very friendly environment for this gold ETF.
SGOL has a small expense ratio (only 0.17%) and is organized differently than GLD. While GLD is structured as a trust that merely tracks the price of gold bullion, SGOL uses its assets to purchase physical bars of gold that it keeps under lock and key in vaults in Switzerland and London. Because …read more
Source:: Investment You