The sanctions against the Russian energy sector and other exports are contributing to price increases and shortages of commodities across the global economy. Given the current, inflationary environment, demand could be pressured which could encourage stagflation. If wages cannot keep up with inflation and the government steps in to offer support feeding inflationary pressures, a stagflation cycle might be precipitated.
In February, gold experienced its largest monthly rally since May 2021. Given the Ukrainian conflict, gold might literally and figuratively shine as an inflation hedge. Gold on Tuesday again rallied beyond the $2,000 per ounce mark, implying its appeal as a safe-haven asset.
Given this backdrop, we think the gold ETFs SPDR Gold Shares (GLD), iShares Gold Trust (IAU), Aberdeen Standard Gold ETF Trust (SGOL), and Goldman Sachs Physical Gold ETF (AAAU) might be ideal bets now.
SPDR Gold Shares (GLD)
GLD as an investment aims to reflect the performance of the gold bullion price, less the trust’s expense. The trust holds gold bars from time to time and aims to reflect the price performance of gold bullion. The trust can be used as a short-term position to hedge against equity market volatility and inflation.
Tracking the LBMA Gold Price PM ($/ozt) index, as of March 9, GLD had $67.98 billion in assets under management. The fund has a 0.40% gross expense ratio , which is lower than the 0.44% category average. Over the past year, its fund flows came in at $520.49 million, and $4.42 billion over the past six months. GLD has a NAV of $185.65.
The ETF has gained 15.5% over the past year and 12% over the past three months to close yesterday’s trading session at $185.82. GLD has a beta of 0.09.
GLD’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
GLD has a Trade and Buy & Hold grade of A and a Peer grade of B. In the 38-ETF Precious Metals ETFs group, it is ranked #1. The group is rated A. Click here to see the POWR Ratings for GLD.
iShares Gold Trust (IAU)
IAU offers exposure to gold by tracking the LBMA Gold Price PM ($/ozt) index. The trust is designed to track the spot price of gold by holding gold bars in a secure vault, providing investors with an option to free themselves from finding a place to store the yellow metal. The trust represents a valid choice for cost-conscious investors.
As of March 9, IAU had $32.20 billion in net assets under management. Its sponsor fee stands at 0.25%, which is significantly below the 0.44% category average. The trust’s fund flows came in at $536.79 million over the past three months, and $692.87 million over the past month. It had a NAV of $37.81, as of March 9.
The trust has gained 12.1% over the past three months to close yesterday’s trading session at $37.84. It has gained 8.5% over the past month. IAU has a beta of 0.07.
It is no surprise that IAU has an overall A rating, which translates to Strong Buy in our POWR Rating system.
The ETF has an A grade for Trade and Buy & Hold, and a B grade for Peer. It is ranked #2 in the Precious Metals ETFs group. To see the POWR Ratings for IAU, click here.
Aberdeen Standard Gold ETF Trust (SGOL)
SGOL offers exposure to gold by tracking the spot price of gold bullion by holding the metal in a secure vault in Switzerland that is audited twice a year. The trust serves as a choice for investors seeking stable precious metals investment.
Over the past six months, SGOL fund flows came in at $115.84 million, and stood at $118.72 million over the past three months. As of March 9, it had a NAV of $19.08, and its expense ratio of 0.17%, which is considerably lower than the 0.44%category average. SGOL has $2.75 billion assets under management. SGOL has a beta of 0.08.
The trust has gained 15.9% over the past year and 12.2% over the past three months to close yesterday’s trading session at $19.11.
This promising outlook is reflected in SGOL’s POWR Ratings. The ETF has an overall A rating, which equates to Strong Buy in our proprietary rating system.
SGOL has a Trade, Buy & Hold, and Peer grade of A. It is ranked #5 in the Precious Metals ETFs group. Click here to see the POWR Ratings for SGOL.
Goldman Sachs Physical Gold ETF (AAAU)
AAAU seeks to reflect the price performance of gold, less the expenses of the trust’s operations. The trust holds London Bars and physical gold of other specifications without numismatic value and receives gold deposited by authorized participants in exchange for creating Baskets.
The ETF has gained 10.7% over the past six months and 8.9% year-to-date to close yesterday’s trading session at $19.79. AAAU has a 0.07 beta.
As of March 9, the ETF’s NAV stood at $19.76 and it had $746.01 million in net assets. It has a 0.18% expense, which is significantly lower than the 0.44% category average. AAAU’s fund flows came in at $339.98 million over the past year and $295.72 million over the past six months.
AAAU has an overall grade of A, which translates to Strong Buy in our POWR Rating system.
AAAU has an A grade for Trade, Buy & Hold, and Peer. It is ranked #8 in the Precious Metals ETFs group. To see the POWR Ratings for AAAU, click here.
GLD shares were trading at $186.82 per share on Thursday afternoon, up $1.00 (+0.54%). Year-to-date, GLD has gained 9.28%, versus a -10.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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