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The coronavirus pandemic is sparking fears of a global economic recession among investors as the outbreak is disrupting global supply chains followed by the shutdown of economic activities. The market participants also seem to be worried about the pandemic’s impact on corporate earnings. Accordingly, in the wake of the current scenario, investors are rushing to safe-haven assets like gold, resulting in its rally to the highest level in more than seven years. Moreover, volumes in the most popular exchange-traded fund, SPDR Gold Shares (GLD - Free Report) , jumped above 1,000 tons to the highest level since mid-2013 on Apr 13.
Notably, the outbreak has caused an unprecedented collapse of economic activities, as governments are forced to shut down commerce and either suggest or order people to remain indoors, in an effort to contain the spread of the virus (read: After a Moderate Q1, What Lies Ahead for Gold ETFs in Q2?).
Studying the current scenario, JPMorgan Chase & Co. (JPM - Free Report) economists project that the global economy will see lost output at $5.5 trillion or almost 8% of GDP through the end of 2021. Moreover, they believe that the cost to developed economies will be similar to what was borne by them during the 2008-2009 and 1974-1975 recessions. Going on, according to Morgan Stanley (MS - Free Report) , GDP in developed markets will return to the pre-pandemic levels by the third quarter of 2021. Moreover, the International Monetary Fund managing director Kristalina Georgieva has commented, "this is a crisis like no other. We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis" (of 2008-2009) (read: Try These Global Low-Volatility ETFs on Rising Recession Scares).
Also, some analysts believe the Federal Reserve’s measures to provide support to the ailing economy seem to be supportive of investments in gold and treasuries. Also, interest-rate cuts are lowering the opportunity costs of investing in non-yielding bullion.
Summing up, the following comment from Joni Teves, a strategist at UBS Group AG, shows how the current scenario looks conducive for investments in the yellow metal, “liquidity conditions are challenging and market participants are understandably cautious. Gold’s journey has been quite bumpy so far, but given the macro backdrop we think the destination remains higher.”
Gold ETFs to Shine
Yellow-metal investments have been popular this year due to the coronavirus outbreak. Notably, gold holdings in ETFs had already risen 170.5 tons this year through Mar 10. Also, the global stash of gold in exchange-traded funds touched the highest level in seven years in the middle of the first quarter.
Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) and GraniteShares Gold Trust (BAR - Free Report) are some of the popular ETFs. These funds carry a Zacks ETF Rank #3 (Hold). Below we have discussed these in detail:
GLD
This is the largest and most popular ETF in the gold space, with an AUM of $53.72 billion and average daily volume of 10.9 million shares. The fund reflects the performance of the price of gold bullion, less the Trust's expenses. At launch, each share of this ETF represented about 1/10th of an ounce of gold. The expense ratio is 0.40% (read: Q1 ETF Asset Report: What's Hot, What's Not).
IAU
This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has an AUM of $21.55 billion and trades in a solid volume of 22.5 million shares a day, on average. At launch, each share of this ETF represented about 1/100th of an ounce of gold. The ETF charges 25 basis points (bps) in annual fees (read: Economy to be "Awash With Liquidity"? Buy Gold ETFs).
GLDM
This product seeks to reflect the performance of the price of gold bullion less GLDM’s expenses. Being one of the low-cost products with an expense ratio of 0.18%, GLDM has accumulated $1.98 billion in AUM and trades in average daily volume of 2 million shares. At launch, each share of this ETF represented about 1/100th of an ounce of gold.
BAR
With an AUM of $817.1 million and an expense ratio of 0.17%, the fund tracks the performance of gold price less trust expenses. It trades in a moderate volume of 330,000 shares per day, on average. At launch, each share of this ETF represented about 1/100th of an ounce of gold (see: all the Precious Metal ETFs here).
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Gold ETFs Shining Bright Amid Coronavirus Crisis
The coronavirus pandemic is sparking fears of a global economic recession among investors as the outbreak is disrupting global supply chains followed by the shutdown of economic activities. The market participants also seem to be worried about the pandemic’s impact on corporate earnings. Accordingly, in the wake of the current scenario, investors are rushing to safe-haven assets like gold, resulting in its rally to the highest level in more than seven years. Moreover, volumes in the most popular exchange-traded fund, SPDR Gold Shares (GLD - Free Report) , jumped above 1,000 tons to the highest level since mid-2013 on Apr 13.
Notably, the outbreak has caused an unprecedented collapse of economic activities, as governments are forced to shut down commerce and either suggest or order people to remain indoors, in an effort to contain the spread of the virus (read: After a Moderate Q1, What Lies Ahead for Gold ETFs in Q2?).
Studying the current scenario, JPMorgan Chase & Co. (JPM - Free Report) economists project that the global economy will see lost output at $5.5 trillion or almost 8% of GDP through the end of 2021. Moreover, they believe that the cost to developed economies will be similar to what was borne by them during the 2008-2009 and 1974-1975 recessions. Going on, according to Morgan Stanley (MS - Free Report) , GDP in developed markets will return to the pre-pandemic levels by the third quarter of 2021. Moreover, the International Monetary Fund managing director Kristalina Georgieva has commented, "this is a crisis like no other. We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis" (of 2008-2009) (read: Try These Global Low-Volatility ETFs on Rising Recession Scares).
Also, some analysts believe the Federal Reserve’s measures to provide support to the ailing economy seem to be supportive of investments in gold and treasuries. Also, interest-rate cuts are lowering the opportunity costs of investing in non-yielding bullion.
Summing up, the following comment from Joni Teves, a strategist at UBS Group AG, shows how the current scenario looks conducive for investments in the yellow metal, “liquidity conditions are challenging and market participants are understandably cautious. Gold’s journey has been quite bumpy so far, but given the macro backdrop we think the destination remains higher.”
Gold ETFs to Shine
Yellow-metal investments have been popular this year due to the coronavirus outbreak. Notably, gold holdings in ETFs had already risen 170.5 tons this year through Mar 10. Also, the global stash of gold in exchange-traded funds touched the highest level in seven years in the middle of the first quarter.
Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM - Free Report) and GraniteShares Gold Trust (BAR - Free Report) are some of the popular ETFs. These funds carry a Zacks ETF Rank #3 (Hold). Below we have discussed these in detail:
GLD
This is the largest and most popular ETF in the gold space, with an AUM of $53.72 billion and average daily volume of 10.9 million shares. The fund reflects the performance of the price of gold bullion, less the Trust's expenses. At launch, each share of this ETF represented about 1/10th of an ounce of gold. The expense ratio is 0.40% (read: Q1 ETF Asset Report: What's Hot, What's Not).
IAU
This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has an AUM of $21.55 billion and trades in a solid volume of 22.5 million shares a day, on average. At launch, each share of this ETF represented about 1/100th of an ounce of gold. The ETF charges 25 basis points (bps) in annual fees (read: Economy to be "Awash With Liquidity"? Buy Gold ETFs).
GLDM
This product seeks to reflect the performance of the price of gold bullion less GLDM’s expenses. Being one of the low-cost products with an expense ratio of 0.18%, GLDM has accumulated $1.98 billion in AUM and trades in average daily volume of 2 million shares. At launch, each share of this ETF represented about 1/100th of an ounce of gold.
BAR
With an AUM of $817.1 million and an expense ratio of 0.17%, the fund tracks the performance of gold price less trust expenses. It trades in a moderate volume of 330,000 shares per day, on average. At launch, each share of this ETF represented about 1/100th of an ounce of gold (see: all the Precious Metal ETFs here).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>