Investors looking to navigate a volatile market may find that physical gold offers more protection than gold stocks, according to George Milling-Stanley, the chief gold strategist at State Street Global Advisors. Gold bars can provide a hedge against weakness in the equity market, as gold mining stocks tend to follow the general trend of equities and may not offer the same level of protection. Milling-Stanley’s firm manages two ETFs that track the spot price of gold, with different expense ratios that cater to different types of investors.
The SPDR Gold Shares ETF (GLD) and SPDR Gold MiniShares Trust (GLDM) have expense ratios of 0.40% and 0.10%, respectively, which impacts the type of investor they attract. GLD may be more suitable for active traders due to its liquidity and lower trading costs, while GLDM with its lower expense ratio could be preferable for those looking to make a long-term investment in gold. Both ETFs have seen gains of 15% year to date as of the latest market close, reflecting the attractiveness of gold as an asset class in a turbulent market environment.
Contrary to the belief that gold is a traditional investment favored by older generations, Milling-Stanley highlights that millennials are allocating a significant portion of their portfolios to gold. This shift comes as bitcoin gains popularity among millennials and Generation Z. While bitcoin may compete with gold for tactical investors looking for short-term gains, gold remains a strategic asset for long-term allocations. State Street’s research indicates that gold and bitcoin serve different purposes in a diversified portfolio, with gold offering stability and diversification benefits.
As investors seek to diversify their portfolios and protect against market volatility, gold has emerged as a valuable asset class that can provide stability and hedging benefits. While bitcoin may attract attention from younger investors, gold remains a reliable store of value and a key component of a diversified investment strategy. By understanding the unique characteristics of physical gold and gold ETFs, investors can make informed decisions on how to incorporate gold into their portfolios based on their investment goals and risk tolerance. Ultimately, gold offers a timeless appeal and a proven track record as a safe haven asset in uncertain times.
