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Hedge or Diversifier? The Modern Take on Gold

Max Chen

This article was originally published on ETFTrends.com.

A theory has been that an allocation to gold may help mitigate volatility in times of crisis. In the first half of the year, Gold has helped hedge against the uncertainty during the pandemic and growing concerns about inflation.

In the upcoming webcast, Hedge or Diversifier? The Modern Take on Gold, George Milling–Stanley, Chief Gold Strategist, State Street Global Advisors; and Juan Carlos Artigas, Director, Investment Research, World Gold Council, will review the underlying fundamentals of Gold in 2020, and whether they may continue to support counter-correlated movements in the yellow metal.

ETF investors who are interested in diversifying their portfolios with gold exposure now have several options to choose from. For example, the SPDR Gold Shares (NYSEArca: GLD), the most liquid and largest physically backed gold-related ETF on the market, has been the go-to ETF option for gold investments.

Investors have looked to GLD as a quick and easy way to gain exposure to gold price movements as they hedge against market risks, help protect their purchasing power in times of inflationary pressures or capitalize on increasing demand from the emerging markets with a growing middle-income class. In the current uncertain market environment, many have turned to physical gold as a way to safeguard their wealth and purchasing power.

The World Gold Council and State Street Global Advisors also expanded on the gold ETF theme with another gold offering that provides the cheapest exposure along with a low share price to those investors seeking exposure to the precious yellow metal. The SPDR Gold MiniShares Trust (NYSEArca: GLDM) has a 0.18% expense ratio and was initially listed at a per-share trading price of 1/100th of an ounce of gold, as represented by the LBMA Gold Price PM (USD). The low-cost gold ETF has quickly been attracting attention from buy-and-hold investors who are interested in the long-term benefits of incorporating a cheap gold investment in a diversified portfolio.

GLDM’s strategy is identical to GLD – both are physically backed by gold bullion and are structured as grantor trusts. However, GLD’s price was 1/10th the price of gold in ounces at its inception while the Gold MiniShares ETF was priced at 1/100th the price of gold in ounces.

Financial advisors who are interested in learning more about gold investing can register for the Tuesday, June 16, webcast here.

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