7 Fundamentals of Gold
This article was originally published on ETFTrends.com.
The outlook for gold is the brightest it’s been in almost a decade.
On the upcoming webcast Tuesday, July 17, 7 Fundamentals of Gold, Frank Holmes, CEO and Chief Investment Officer at U.S. Global Investors, and Randy Smallwood, CEO of Wheaton Precious Metals, will highlight why gold is a timely equity strategy that could help financial advisors capture the ongoing strength in the hard asset.
For example, the U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) has been a great way for investors to capture the gold mining space as the smart beta gold miner ETF has outperformed the competition.
Over the past year, GOAU increased 10.6%, whereas the VanEck Vectors Gold Miners ETF (GDX) , the largest ETF dedicated to gold mining stocks, rose 3.0% and iShares MSCI Global Gold Miners Fund (RING) , which tracks global gold producers, dipped 0.2%.
GOAU's Smart Beta Indexing
GOAU's smart beta indexing methodology may have helped the ETF outperform its peers as it focused on steady revenue streams and diminished risks that could have weighed on the value of other gold miners during the recent bout of weakness.
The U.S. Global GO GOLD and Precious Metal Miners ETF is a smart beta offering that tracks a specialized or rules-based index to help hone in on quality players in the gold mining space. The underlying U.S. Global GO GOLD and Precious Metal Miners Index uses quantitative analysis to pick stocks, with a particular focus on royalty companies.
The GO GOLD and Precious Metal Miners ETF tries to reflect the performance of the U.S. Global Go Gold and Precious Metal Miners Index, which is comprised of U.S. and international companies that earned at least 50% of their aggregate revenue from precious metals and categorizes components into four “tiers” of precious metals companies based on certain fundamental factors.
Each tier includes those having revenue per employee that is greater than the median for companies whose revenue per employees is in the top 20th percentile of the broader universe. Additionally, the screen also factors in operating cash flow per employee and gross margin.
Furthermore, the ETF includes a 30% tilt to royalty and streaming companies, which could help investors better manage common risks associated with traditional producers, such as building and maintaining mines, among others. The lower risk may also diminish risk since royalty companies have historically rewarded investors by increasing dividends at a faster pace than the broader equity market.
Financial advisors who are interested in learning more about the gold market can register for the Tuesday, July 17 webcast here.
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