2 Gold ETFs To Protect Against Inflation

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Because rising stock market volatility, a weakening U.S. dollar and inflation concerns are expected to drive the demand for gold as a haven for value, it could be wise to bet now on gold ETFs SPDR (GLD) and VanEck Vectors (GDX).

Gold prices have rebounded off their March lows on continued concerns over rising inflation, a weakening U.S. dollar, and stock market volatility. Indeed, gold prices are up for the eighth straight day. The rising demand for the precious metal is driven primarily by the yellow metal’s ability as a hedge for investors against inflation and current market volatility.

Investors’ rising interest in gold is evidenced by the SPDR Gold Trust ETF’s  4.7% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 0.3% decline.

Because rising consumer spending on the back of an improving job market could lead to further increases in consumer prices, demand for gold as a hedge should rise further. As such, we think it could be wise to invest now in GLD and VanEck Vectors Gold Miners ETF.

SPDR Gold Shares

GLD is one of the most popular ETFs in the world. It is a relatively straightforward product for which underlying assets consist of gold bullion stored in secure vaults. The price of this ETF can be expected to move in lock step with spot gold prices.

With $60.65 billion in AUM, GLD was the first ETF to market to invest directly in physical gold. It has a 0.40% expense ratio, which is lower than the 0.49% category average. GLD has gained 8.5% over the past year and 5.4% over the past three months.

GLD’s POWR Ratings are consistent with its growth outlook. It has an overall B rating, which equates to Buy in our proprietary rating system. It also has an A for Trade Grade, and a B for Peer Grade and Buy & Hold Grade.

GLD is ranked #7 of 36 ETFs in the Precious Metals ETFs group. In addition, one can see all GLD’s ratings here.

VanEck Vectors Gold Miners ETF

GDX offers investors exposure to some of the largest gold mining companies in the world, thereby delivering what can be viewed as “indirect” exposure to gold. The performance of the stocks it holds generally has a strong correlation with movements in spot gold prices. But in certain environments, GDX stocks and physical gold prices can move in opposite directions.

The fund has $15.72 billion in AUM. Its top holdings include Newmont Corporation (NEM), with a 15.88% weighting, Barrick Gold Corporation (GOLD) at 11.85% and Franco-Nevada Corporation (FNV) with 7.77%. The fund’s 0.53% expense ratio is slightly higher than the 0.46% category average.

GDX pays a $0.19 annual dividend, which yields 0.5% on the prevailing price. The ETF’s average four-year dividend yield stands 0.6%. GDX has gained 20% over the past three months and 10.2% over the past year.

It’s no surprise that GDX has an overall B rating, which equates to Buy in our proprietary rating system. It has an A for Trade Grade, and a B for Buy & Hold Grade.

Click here to access GDX’s ratings for Peer Grade as well. GDX is ranked #9 in the Precious Metals ETFs group.

GLD shares were trading at $176.33 per share on Monday afternoon, up $0.29 (+0.16%). Year-to-date, GLD has declined -1.14%, versus a 12.68% rise in the benchmark S&P 500 index during the same period.

Disclaimer: Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use, please ...

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