Commodities | Apr 09 2025
By Rudi Filapek-Vandyck, Editor
The 'Trump Dump', 'Trump Slump' or whatever term you like to use for it ("sheer idiocy" is also allowed) has undeniably revived investor interest in safe haven gold.
My personal preference is to have exposure to the metal rather than through gold producers and explorers as history time and again reveals this is the lower risk option.
Apart from specific currency risks (AUD versus USD) and moves in the all-important bond markets, gold carries no company-specific risks and have recent years not thrown up plenty of risks for gold miners on the ground!
The basic proposition is as follows: if you invest in gold stocks rather than in gold or a gold derivative, your reward can be significantly higher in the good times and significantly lower in the not so great times.
There's no 'right' or 'wrong' here. Horses for courses. One has to know one's own risk appetite, strategy and investment horizon.
The underlying trend for gold priced in USD continues to be pointing upwards and analysts have been upgrading their lagging forecasts, with expectations for ongoing gains building. Share prices for gold producers generally are implying a lower price for bullion, i.e. they are trading at a discount against the metal.
You know investor interest is on the rise when a recent outlook report by analysts at Citi carries the title: "A once in a 40-year gift for gold producers".
So, there's a valid logic to add exposure to portfolios.
The FNArena-Vested Equities All-Weather Model Portfolio habitually owns an allocation to gold -- as insurance for when calamity arrives. Back in 2020 when the global pandemic caused societies to lock down, the portfolio's allocation exceeded 10% (in addition to a rather large cash holding).
Today's allocation is around 7%, and that includes a recent top up as global risks were on the rise since 'Trumpty Dumpty' was hellbent on starting a Trade War with just about everyone outside of Russia.
So let's start with gold, the metal. Probably the easiest way to add exposure is through Exchange-Traded Funds (ETFs) listed on the ASX.
These ETFs provide exposure to either physical gold or gold mining companies, offering diversification and convenience without the need to store physical bullion.
Physical Gold ETFs
These ETFs are backed by physical gold, allowing investors to track the price of gold directly.
Global X Physical Gold (ASX: GOLD)
-Backed by physical gold stored in a London vault by JPMorgan Chase.
-Unhedged, meaning returns can be influenced by currency fluctuations between the Australian Dollar (AUD) and US Dollar (USD).
-Management fee: 0.40%.
-Assets under management: $4.48bn.
Perth Mint Gold (ASX: PMGOLD)
-Backed by gold bullion stored at the Perth Mint, with a government guarantee from Western Australia.
-One of the lowest-cost options with a management fee of 0.15%.
-Assets under management: $1.35bn.
-Can be converted into physical bullion through a Perth Mint Depository account.
BetaShares Gold Bullion ETF Currency Hedged (ASX: QAU)
-Backed by physical gold stored in London but hedged to minimise currency risk between AUD and USD.
-Management fee: 0.59%.
-Assets under management: $944m.
VanEck Gold Bullion ETF (ASX: NUGG)
-Backed by physical gold sourced exclusively from Australian producers and stored at the Perth Mint
-Unhedged, with a management fee of 0.25%.
Global X Gold Bullion (Currency Hedged) ETF (ASX: GHLD)
-Tracks the spot price of gold while hedging against AUD/USD currency movements.
-Management fee: 0.35%.
Gold Mining ETFs
These ETFs invest in companies involved in gold mining and production, offering indirect exposure to the gold market.
VanEck Gold Miners ETF (ASX: GDX)
-Provides exposure to global gold miners, including companies like Newmont and Barrick Gold, with some Australian holdings (~11%).
-Management fee: 0.53%.
BetaShares Global Gold Miners ETF (ASX: MNRS)
-Tracks an index of global gold mining companies, with a focus on firms outside Australia (~50% Canadian).
-Currency-hedged and provides semi-annual distributions.
-Management fee: 0.57%.
ASX-listed Companies
But what if you'd like to pick a specific gold miner or two? The rewards from successful stock-picking can be many times over more rewarding than through owning a risk-limiting ETF.
Stockbrokers have updated their thoughts and favourites recently. Below is a bird eye's view of those sector updates.
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