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Gold Beats Stocks & Bonds in 1H: ETFs to Play

Gold has enjoyed a strong rally in the first half of 2020 on safe-haven demand, beating equities and bonds. Global growth concerns triggered by the coronavirus outbreak have raised the appeal for the yellow metal as a great store of value and hedge against market turmoil.

The second wave of coronavirus infections has emerged lately, fueling the rush to the yellow metal. This is especially true as 38,115 new infections across the United States were reported by state health departments on Wednesday — surpassing the single-day record of 34,203 set on Apr 25. Texas, Florida and California led the way, with all three states reporting more than 5,000 new cases a piece. Three states — California, Florida and Oklahoma — reported record highs in new single-day coronavirus cases, while hospitalizations hit a new peak in Arizona, where intensive care units have quickly filled.

Additionally, the number of fiscal and monetary policies taken by the government and central banks across the globe to combat the sharp economic slowdown due to the COVID-19 pandemic added to the metal’s strength (read: Get Ready for a Gold Rush: ETFs in Focus).

Further, re-emergence of trade tension and the latest International Monetary Fund’s (IMF) downgrade for the economic growth outlook added to the yellow metal’s glitter. Washington is considering new tariffs on $3.1 billion worth of European imports in a move that would broaden a transatlantic dispute over aircraft subsidies, according to the Office of the U.S. Trade Representative. Meanwhile, IMF expects a deeper global recession, with GDP likely to shrink 4.9%, much sharper than the 3.0% contraction predicted in April.

Even though jewelry demand was the lowest in over 10 years in the first quarter, investment demand for gold was the highest since the first quarter of 2016, per the World Gold Council.

All the combinations have resulted in a spike in gold price by more than 16% this year. The trend is likely to continue given the bullish trends. As a result, investors could tap the current trend in bullion price with the help of ETFs. We have highlighted the five best performing gold ETFs of 1H that could be excellent plays for investors, who believe that gold will continue to move higher (see: all the Precious Metals ETFs here).

GraniteShares Gold Trust BAR

With AUM of $1 billion and expense ratio of 0.17%, the fund tracks the performance of gold price. It trades in a moderate volume of 433,000 shares per day on average and has a Zacks ETF Rank #3.

iShares Gold Trust IAU

This ETF offers exposure to the day-to-day movement of the price of gold bullion and is backed by physical gold under the custody of JP Morgan Chase Bank in London. It has AUM of $25.7 billion and trades in solid volume of 25.7 million shares a day on average. The ETF charges 25 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.

SPDR Gold MiniShares Trust GLDM

This product seeks to reflect the performance of the price of gold bullion. With expense ratio of just 0.18%, GLDM has gathered $2.4 billion in AUM and trades in solid average daily volume of 2.6 million shares. It has a Zacks ETF Rank #3.

Aberdeen Standard Physical Swiss Gold Shares ETF 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 $2.2 billion in its asset base and trades in a solid volume of 1.6 million shares per day. The product has an expense ratio of 0.17% and a Zacks ETF Rank #3 with a Medium risk outlook (read: Second Wave of Coronavirus Hits: ETF Areas to Win/Lose).

Perth Mint Physical Gold ETF AAAU

This ETF provides an easily accessible and cost-effective way to invest in gold with the understanding that the shares are underpinned by deliverable physical gold. AAAU shares are backed by allocated gold secured within The Perth Mint’s network of central bank grade vaults in Western Australia. The product has accumulated $351.1 million and trades in average daily volume of 242,000 shares. It has 18 bps in annual fees.

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iShares Gold Trust (IAU): ETF Research Reports
Aberdeen Standard Physical Gold Shares ETF (SGOL): ETF Research Reports
GraniteShares Gold Trust (BAR): ETF Research Reports
Perth Mint Physical Gold ETF (AAAU): ETF Research Reports
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
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Zacks Investment Research
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