Gold prices have surged over the past month due to the volatilities triggered by increased interest rates, soaring debt levels, and escalating geopolitical turmoil in the Middle East induced by the ongoing Israel-Hamas conflict. This situation has propelled a heightened demand for the precious metal as investors seek refuge in its value amid uncertainties.
Experts retain an optimistic stance on gold price prognosis, reflecting the traditional confidence in gold's enduring stability and capacity to retain long-term value during financial uncertainty. Therefore, it could be wise to invest in solid precious metals ETFs SPDR Gold MiniShares (GLDM), iShares Gold Trust (IAU), and SPDR Gold Shares (GLD).
The gold price has risen about 8% since the end of September 2023 and recently surpassed the $2,000 per ounce mark for the second time this year.
The onset of the Israel-Hamas conflict heightened investor anxieties over its potential impacts. A pronounced escalation in gold demand, often touted as a ‘safe-haven’ asset, was observed. World Bank analysts predict that this discord could further elevate the already high gold prices, projecting an average increase of 6% in 2024, amounting to $1,900 per ounce.
Investor anxieties extend beyond global conflicts, with fiscal uncertainty in the U.S. drawing increasing concern. With national debt reaching an unprecedented high of over $33 trillion, speculation over high-interest rates and more potential rate hikes to control inflation compounds these worries.
Historically, gold prices have declined due to rising interest rates as investors generally favor interest-bearing assets that can generate greater yields. Currently, however, with treasury yields rising due to fiscal unpredictability, investors are leaning toward the yellow metal. This choice is aided by the fact that gold, unlike stocks, corporate bonds, or government debt, holds no risk of default by its issuers.
Several investment banks retain a positive outlook for gold prices. JPMorgan Chase & Co. projects an escalation from $2,000 per ounce in 2023 to $2,175 per ounce next year. Similarly, Goldman Sachs carries a favorable forecast into the following year, predicting gold prices will reach up to $2,133 per ounce in 2024.
Considering these conducive trends, let's take a look at the key attributes of the top three Precious Metals ETFs group, starting with number 3.
ETF #3: SPDR Gold MiniShares (GLDM)
GLDM is an ETF launched and managed by Wgc Usa Asset Management Company Llc. The fund invests in gold. It is designed for investors who want a cost-effective and convenient way to invest in gold.
As of November 2, GLDM had $5.95 billion in AUM and an NAV of $39.35. Its total expense ratio is 0.10%, compared to the category average of 0.47%. It has a beta of 0.13.
GLDM has gained 8.6% over the past month and 21.2% over the past year to close the last trading session at $39.39.
GLDM’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
GLDM has an A grade for Buy & Hold, Peer, and Trade. The fund is ranked #3 of 38 ETFs in the B-rated Precious Metals ETFs category. Click here to access GLDM’s ratings.
ETF #2: iShares Gold Trust (IAU)
IAU is an ETF launched and managed by iShares Delaware Trust Sponsor LLC. The fund offers exposure to one of the world’s most famous metals, gold. It tracks the spot price of gold bullion by holding gold bars in a secure vault, allowing investors to free themselves from finding a place to store the metal.
As of November 2, IAU had $25.65 billion in AUM and an NAV of $37.55. Its total expense ratio is 0.25%, compared to the category average of 0.47%. It has a beta of 0.13.
IAU has gained 8.5% over the past month and 21.1% over the past year to close the last trading session at $37.60.
IAU’s positive prospects are reflected in its POWR Ratings. The ETF has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
The ETF has an A grade for Buy & Hold, Peer, and Trade. Within the same group, it is ranked #2. To see all POWR Ratings for IAU, click here.
ETF #1: SPDR Gold Shares (GLD)
GLD is a world-renowned ETF launched and managed by World Gold Trust Services, LLC. It offers investors exposure to gold, which has of late become an essential component of its asset allocation strategy by acting as a hedge against volatility in equity markets, inflation, and dollar depreciation.
With an impressive $54.92 billion AUM, GLD exclusively holds gold bullion stored in secure vaults. GLD’s physically-backed nature effectively buffers against the unpredicted uncertainties introduced through futures-based strategies.
GLD has an expense ratio of 0.40%, lower than the category average of 0.47%. It has a beta of 0.13.
GLD has gained 8.5% over the past month and 20.8% over the past year to close the last trading session at $184.12. The fund’s NAV was $183.94 as of November 2, 2023.
GLD’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, translating to a Strong Buy in our POWR Ratings system.
GLD has an A grade for Buy & Hold and Trade and a B for Peer. It is ranked first in the same category. Click here to see the POWR Ratings for GLD.
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GLD shares. Year-to-date, GLD has gained 8.54%, versus a 13.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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