Rampant inflation has made the gold trade hot again, and the best way to play the momentum may be through ETFs and owning the physical metal, says one commodities industry veteran.
“The ETFs are probably the easiest way. You can buy equity ETFs and you can also buy the physical gold. The physical gold is a very safe bet, but you don’t get the premium that you get in a good equity,” said Barrick Gold CEO Mark Bristow on Yahoo Finance Live.
To say the gold trade had been dead in the water for almost two years may be an understatement, as investors rotated into high growth stocks in a bid to drive returns during a sharp economic recovery.
Gold prices haven’t yet reclaimed their more than $2,000 an ounce highs seen in late July 2020. Prices dipped to as low as $1,728 an ounce in Sept. 2021.
Gold – Metal, Stock Market and Exchange, Ingot, Consumerism
But with inflation staying elevated, traders have plowed back into gold as a safe-haven, store-of-value trade.
Gold prices have popped by about 6% since late January to nearly $1,900 an ounce. The SPDR Gold Shares ETF is up 5% in the last four weeks.
Shares of gold producers have shot up even higher.
Barrick Gold shares are up 20% in the last month, while Newmont Mining has shot up 10%.
As for Barrick Gold, its stock got a lift this week as it declared a dividend and signaled it will stay disciplined in how it approaches potential M&A.
Added Bristow, “The last 50, 60 years gold has always been a stabilizer in a portfolio. You should have around 5% of your portfolio in some sort of gold package. That really helps you through difficult times.”