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Gold has gained momentum this month and has risen to a more than three-month high on the back of a weak dollar and rising inflation fears. This is especially true as a weak dollar makes dollar-denominated assets attractive for foreign investors while lower yields have raised the metal’s attractiveness, as it does not pay interest like fixed-income assets.
Meanwhile, rising prices in the United States and the expectation for further increase bolstered the appeal for the bullion as an inflation hedge. U.S. consumer prices climbed the most since 2009 in April while producer prices also expanded the most in a decade. The Fed viewed the inflationary pressure as temporary and has pledged to keep rates at lower levels (read: Inflation Zooms to 13-Year High: 5 Solid TIPS ETF Picks).
Additionally, a flare-up in coronavirus cases in parts of Asia, more specifically in India, has sparked concerns over the pace of a global economic recovery. This has boosted the demand for the yellow metal as a great store of value and hedge against market turmoil. Further, signs that money managers and ETF investors are turning more positive on the precious metal have added to the strength. According to the data compiled by Bloomberg, ETF investors have bought bullion for the past six sessions, following months of sales.
The solid trend in the bullion is likely to continue at least for the short term with market participants projecting gold to touch $1,900 per ounce.
Ways to Play
Given the optimism and intense buying pressure on gold lately, investors have a long list of options to tap the metal’s rally. Below, we have highlighted some of them:
Simple Gold ETFs
While there are many products that are directly linked to the spot gold price or futures, we have highlighted the most-popular ETFs that carry a favorable Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
SPDR Gold Trust ETF (GLD - Free Report) : This is the largest and most-popular ETF in the gold space with AUM of $60.6 billion and an average daily volume of around 7.3 million shares. The fund tracks the price of gold bullion measured in U.S. dollars and has expense ratio comes in at 0.40% (read: ETF Strategies to Win From Likely Rise in Inflation).
iShares Gold Trust (IAU - Free Report) : This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has AUM of $29.3 billion and trades in solid volume of 21.3 million shares a day on average. The ETF charges 25 bps in annual fees.
SPDR Gold MiniShares Trust (GLDM - Free Report) : This product seeks to reflect the performance of the price of gold bullion. Being a low-cost product with an expense ratio of just 0.18%, GLDM has amassed $4.4 billion in AUM and trades in a solid average daily volume of 2.1 million shares.
Gold Mining ETFs
Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. Hence, mining ETFs also appear as compelling choices:
Market Vectors Gold Mining ETF (GDX): This is the most-popular and actively traded gold miner ETF with AUM of $15.7 billion and an average daily volume of around 18 million shares. The fund follows the NYSE Arca Gold Miners Index, holding 52 stocks in its basket. Canadian firms account for about 44% of the portfolio, while the United States (19.7%) and Australia (13.6%) round off the top three. The fund charges 51 bps in annual fees.
VanEck Vectors Junior Gold Miners ETF (GDXJ): GDXJ is a small-cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 96 stocks in its basket, Canadian firms dominate the fund’s portfolio at 48.5%, while Australia (15.3%) and South Africa (8.5%) round out the top three. The product has AUM of $5.8 billion and charges 52 bps in annual fees. It trades in heavy volume of around 5.5 million shares a day on average (read: all the Material ETFs here).
iShares MSCI Global Gold Miners ETF (RING - Free Report) : This ETF follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 40 securities in its portfolio. Canadian firms take half of the portfolio, while the United States takes the next spot at 24% share. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $506.2 million and trades in a good volume of 188,000 shares per day.
Leveraged Gold ETFs
Investors who are bullish on gold may consider a near-term long on the precious metal with the following ETFs.
ProShares Ultra Gold ETF (UGL - Free Report) : This fund seeks to deliver twice (2X or 200%) the return of the daily performance of the Bloomberg Gold Subindex. It charges 95 bps in fees a year and has amassed $245.4 million in its asset base. Volume is good at about 107,000 shares per day.
DB Gold Double Long ETN (DGP - Free Report) : This ETN seeks to take a two times leveraged view on the performance of gold. It is based on a total return version of the Deutsche Bank Liquid Commodity Index Optimum Yield Gold, charging 75 bps in fees per year. It has accumulated $109.5 million in its asset base so far and trades in an average daily volume of 12,000 shares.
Direxion Daily Gold Miners Index Bull 2X Shares NUGT): NUGT provides two times exposure to the daily performance of the NYSE Arca Gold Miners Index. It charges 90 bps in annual fees and has gathered $1 billion in its asset base. Volume is heavy with around 2.5 million shares exchanged per day on average (read: 5 Best Leveraged ETF Areas of Last Week).
Direxion Daily Junior Gold Miners Index Bull 2x Shares (JNUG - Free Report) : This product provides 2X exposure to the daily performance of the MVIS Global Junior Gold Miners Index. It charges 87 bps in annual fees and has accumulated $678.5 million in its asset base. Volume is heavy, exchanging about 846,000 in shares per day on average.
MicroSectors Gold Miners 3X Leveraged ETN (GDXU - Free Report) : This ETN seeks to deliver three times (3X or 300%) the performance of the S-Network MicroSectors Gold Miners Index. It has amassed $33.1 million in its asset base since its debut last December and charges 95 bps in annual fees. The product trades in an average daily volume of 176,000 shares.
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Gold Regains Luster: ETF Ways to Tap the Rally
Gold has gained momentum this month and has risen to a more than three-month high on the back of a weak dollar and rising inflation fears. This is especially true as a weak dollar makes dollar-denominated assets attractive for foreign investors while lower yields have raised the metal’s attractiveness, as it does not pay interest like fixed-income assets.
Meanwhile, rising prices in the United States and the expectation for further increase bolstered the appeal for the bullion as an inflation hedge. U.S. consumer prices climbed the most since 2009 in April while producer prices also expanded the most in a decade. The Fed viewed the inflationary pressure as temporary and has pledged to keep rates at lower levels (read: Inflation Zooms to 13-Year High: 5 Solid TIPS ETF Picks).
Additionally, a flare-up in coronavirus cases in parts of Asia, more specifically in India, has sparked concerns over the pace of a global economic recovery. This has boosted the demand for the yellow metal as a great store of value and hedge against market turmoil. Further, signs that money managers and ETF investors are turning more positive on the precious metal have added to the strength. According to the data compiled by Bloomberg, ETF investors have bought bullion for the past six sessions, following months of sales.
The solid trend in the bullion is likely to continue at least for the short term with market participants projecting gold to touch $1,900 per ounce.
Ways to Play
Given the optimism and intense buying pressure on gold lately, investors have a long list of options to tap the metal’s rally. Below, we have highlighted some of them:
Simple Gold ETFs
While there are many products that are directly linked to the spot gold price or futures, we have highlighted the most-popular ETFs that carry a favorable Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
SPDR Gold Trust ETF (GLD - Free Report) : This is the largest and most-popular ETF in the gold space with AUM of $60.6 billion and an average daily volume of around 7.3 million shares. The fund tracks the price of gold bullion measured in U.S. dollars and has expense ratio comes in at 0.40% (read: ETF Strategies to Win From Likely Rise in Inflation).
iShares Gold Trust (IAU - Free Report) : This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has AUM of $29.3 billion and trades in solid volume of 21.3 million shares a day on average. The ETF charges 25 bps in annual fees.
SPDR Gold MiniShares Trust (GLDM - Free Report) : This product seeks to reflect the performance of the price of gold bullion. Being a low-cost product with an expense ratio of just 0.18%, GLDM has amassed $4.4 billion in AUM and trades in a solid average daily volume of 2.1 million shares.
Gold Mining ETFs
Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. Hence, mining ETFs also appear as compelling choices:
Market Vectors Gold Mining ETF (GDX): This is the most-popular and actively traded gold miner ETF with AUM of $15.7 billion and an average daily volume of around 18 million shares. The fund follows the NYSE Arca Gold Miners Index, holding 52 stocks in its basket. Canadian firms account for about 44% of the portfolio, while the United States (19.7%) and Australia (13.6%) round off the top three. The fund charges 51 bps in annual fees.
VanEck Vectors Junior Gold Miners ETF (GDXJ): GDXJ is a small-cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 96 stocks in its basket, Canadian firms dominate the fund’s portfolio at 48.5%, while Australia (15.3%) and South Africa (8.5%) round out the top three. The product has AUM of $5.8 billion and charges 52 bps in annual fees. It trades in heavy volume of around 5.5 million shares a day on average (read: all the Material ETFs here).
iShares MSCI Global Gold Miners ETF (RING - Free Report) : This ETF follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 40 securities in its portfolio. Canadian firms take half of the portfolio, while the United States takes the next spot at 24% share. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $506.2 million and trades in a good volume of 188,000 shares per day.
Leveraged Gold ETFs
Investors who are bullish on gold may consider a near-term long on the precious metal with the following ETFs.
ProShares Ultra Gold ETF (UGL - Free Report) : This fund seeks to deliver twice (2X or 200%) the return of the daily performance of the Bloomberg Gold Subindex. It charges 95 bps in fees a year and has amassed $245.4 million in its asset base. Volume is good at about 107,000 shares per day.
DB Gold Double Long ETN (DGP - Free Report) : This ETN seeks to take a two times leveraged view on the performance of gold. It is based on a total return version of the Deutsche Bank Liquid Commodity Index Optimum Yield Gold, charging 75 bps in fees per year. It has accumulated $109.5 million in its asset base so far and trades in an average daily volume of 12,000 shares.
Direxion Daily Gold Miners Index Bull 2X Shares NUGT): NUGT provides two times exposure to the daily performance of the NYSE Arca Gold Miners Index. It charges 90 bps in annual fees and has gathered $1 billion in its asset base. Volume is heavy with around 2.5 million shares exchanged per day on average (read: 5 Best Leveraged ETF Areas of Last Week).
Direxion Daily Junior Gold Miners Index Bull 2x Shares (JNUG - Free Report) : This product provides 2X exposure to the daily performance of the MVIS Global Junior Gold Miners Index. It charges 87 bps in annual fees and has accumulated $678.5 million in its asset base. Volume is heavy, exchanging about 846,000 in shares per day on average.
MicroSectors Gold Miners 3X Leveraged ETN (GDXU - Free Report) : This ETN seeks to deliver three times (3X or 300%) the performance of the S-Network MicroSectors Gold Miners Index. It has amassed $33.1 million in its asset base since its debut last December and charges 95 bps in annual fees. The product trades in an average daily volume of 176,000 shares.
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 >>