Driven by a combination of economic and political factors, the international gold price has surged by nearly 90% over the past three years. Although it has retreated since hitting an all-time high of over $3,500 per ounce in April and is now stabilizing around $3,340, investors may still have opportunities to gain exposure through gold-related equities and funds. Among these, the L&G Gold Mining ETF continues to show potential for further growth, supported by several key factors: prolonged and severe global trade war risks, declining geopolitical stability, rising inflation expectations, high levels of government debt in Western economies, the potential continued weakness of the U.S. dollar, and ongoing increases in gold reserves by central banks worldwide. Of course, if these trends reverse, gold prices could face downward pressure. Nonetheless, gold-related stocks remain attractive overall, with the current price consolidation phase potentially paving the way for a new upward trend.
For investors seeking lower-risk exposure to gold, physical gold ETFs such as the Xtrackers Physical Gold ETF could be considered. These products are directly linked to the spot price of gold bullion, moving in sync with gold prices while avoiding operational uncertainties specific to mining companies. Although a decline in gold prices would still affect their net asset value, these ETFs are known for their simplicity and transparency, making them highly popular among investors. According to the World Gold Council, the total assets under management in global gold ETFs have reached a record high of $386.4 billion.
Additionally, investors may opt for broader exposure by investing in a basket of precious metals through products like the WisdomTree Physical Precious Metals ETF, which holds physical gold, silver, platinum, and palladium. These metals not only serve as safe-haven assets but are also widely used in industrial applications, providing potential upside during periods of economic growth. It is worth noting, however, that since this fund includes cyclical metals, its performance may fall short of expectations if macroeconomic conditions remain weak.
Finally, investors can also consider direct exposure to gold mining stocks, either through diversified ETFs like the L&G Gold Mining ETF or by selecting individual stocks for higher potential returns—though with increased risk. For example, Serabi Gold (LSE: SRB), a gold mining company operating in Brazil, is expected to steadily increase its production over the coming years due to capacity expansion, positioning it to benefit more significantly from a long-term upward trend in gold prices.
