With geopolitical worries and uncertainty as to how quickly central banks around the world will tighten monetary policy, precious metals such as gold have continued to outperform the broader market, and expectations are that this trend will continue for some time.
For investors seeking a way to gain exposure to the broader gold market, Exchange Traded Funds (ETFs) such as the SPDR Gold Trust (ETF) provide exposure to the commodity price of gold which is as close as possible to the underlying value at any given time. This ETF has done very well thus far this year, posting year to date returns of more than 15%, outperforming both the S&P 500 as well as the Dow Jones by a substantial margin.
With volatility remaining near all-time lows, the question remains with respect to how gold is likely to perform in the long-term; many iconic investors have spoken about the downside of investing in gold over a long period of time due to the fact that the precious metal is a non-productive asset and generally follows inflation over time (although this has been disputed in academia for some time).
That said, with the potential for significant downside looming, hedging a small portion of a portfolio by adding a gold position via the SPDR Gold Trust ETF could turn out to be a very prudent decision, depending on how the global economy continues to perform in the coming years.
Invest wisely, my friends.
