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Precious Metals ETFs Surge amid Russia-Ukraine Crisis

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·2 min read
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The war in Ukraine has supercharged a rally in metals like palladium, aluminum and nickel due to supply disruption fears while gold has rallied lately due to its safe haven status.

Gold prices have surged to their highest levels since August 2020 thanks mainly to investors’ search for safer assets amid rising market uncertainty and geopolitical tensions.

Gold is traditionally seen as a hedge against inflation and a spike in inflation also sent some investors to the precious metal. It is also benefiting from the sell-off in cryptocurrencies. Last year, many younger investors had pivoted to bitcoin, which they viewed as “digital gold.”

Higher rates dim the appeal of gold as they increase the opportunity cost of owning it.  However, while real rates are moving higher, they are likely to remain in negative territory after adjusting for inflation, for some time till inflation cools off significantly.

Russia accounts for 40% of global production of pallidum, which is used by automakers in catalytic converters to curb emissions. Fears of supply disruptions have sent prices to their highest level on record.

Physically backed precious metals ETFs provide low-cost and convenient exposure to the metal.

The SPDR Gold Trust (GLD) is the largest and most liquid gold ETF. Each share of this ETF represents about 1/10th of an ounce of gold. It has an expense ratio of 0.40%.

In 2018, State Street launched a cheaper version of GLD—the SPDR Gold MiniShares Trust (GLDM)—which now has an expense ratio of 0.10%. Each share of this ETF represents about 1/50th of an ounce of gold.

The Aberdeen Standard Physical Palladium Shares ETF (PALL) is up over 60% year-to-date.

To learn more about these ETFs, please watch the short video above.


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SPDR Gold Shares (GLD): ETF Research Reports
 
iShares Gold Trust (IAU): ETF Research Reports
 
Aberdeen Standard Physical Palladium Shares ETF (PALL): ETF Research Reports
 
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
 
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Zacks Investment Research