Gold ETFs Shine in 1H: Will the Bloom Continue in 2H?

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4 hours ago

Gold has been on a powerful upward trajectory this year, fueled by strong safe-haven demand amid Trump's tariff chaos and escalating geopolitical tensions, weakening U.S. dollar and growing expectations of Federal Reserve rate cuts. The yellow metal has posted monthly gains for five straight months as of May, its longest run since 2017. It hit a new all-time high of $3,500 in April and then retreated from this level. Gold has moved up 27% since the start of the year.According to a report by Axis Securities, gold is on track to reach a milestone with a six-month winning streak not seen in over two decades (read: Gold Up 27% YTD: How Long Will the Rally Last?).Given the surge in gold prices, gold mining ETFs are blooming in the first half, with many analysts expecting further gains in the second half. The mining companies act as leveraged plays on the underlying metal prices and, thus, tend to experience more gains than their bullion cousins in a rising metal market.Sprott Gold Miners ETF SGDM is leading the pack, jumping 65% since the start of the year, followed by gains of 63.7% for Themes Gold Miners ETF AUMI, 61% for VanEck Junior Gold Miners ETF GDXJ, 59.7% for Global X Gold Explorers ETF GOEX, and 58.8% for iShares MSCI Global Gold Miners ETF RING.We have highlighted several reasons for the solid rally in gold and its outlook:
President Donald Trump's set of tariffs has lured investors to shift to defensive investments. Gold is often used to preserve wealth during financial and political uncertainty and usually does well when other asset classes struggle. Additionally, the inflationary pressure caused by new tariffs will benefit the precious metal's status as a hedge against rising prices.
A weaker dollar and sustained central bank buying also buoyed gold's rally this year. The central banks are dominant buyers of gold as they seek to diversify their reserves away from the U.S. dollar. According to a recent survey conducted by the World Gold Council, about 95% of central banks believe their gold reserves will increase over the next 12 months.
Though the Fed has kept interest rates steady at the latest meeting, an imminent rate cut can be in the cards in the next couple of months. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, increasing its attractiveness over fixed-income investments such as bonds.Analysts now forecast gold to trade between $3,500 and $3,700 as investors seek refuge from escalating geopolitical tensions and rising inflation risks. Goldman Sachs reiterated its bullish long-term view on gold, highlighting strong central bank demand. Goldman forecasts gold to reach $3,700 by the end of 2025 and $4,000 by mid-2026. In a recession scenario, accelerating ETF inflows can lift gold to $3,880 by year-end. Year to date, the two largest gold ETFs — SPDR Gold Shares GLD and iShares Gold Trust IAU — have attracted more than $11 billion in combined inflows, according to ETFAction.com. SPDR Gold Shares alone has taken in nearly $7 billion, ranking it No. 13 among all ETFs by asset flows (read: Why Gold ETFs Offer the Best Safe Haven Right Now).
Let us delve into each ETF below:Sprott Gold Miners ETF (SGDM)Sprott Gold Miners ETF follows the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 37 stocks in its basket. Canada takes the top spot at 75.2%, followed by 17.6% in the United States. Sprott Gold Miners ETF has amassed $418.6 million in its asset base and trades in a lower volume of around 42,000 shares a day. It charges 50 bps in annual fees from investors. Themes Gold Miners ETF (AUMI)Themes Gold Miners ETF seeks to track the Solactive Global Pure Gold Miners Index, which identifies the largest 30 companies by market capitalization, deriving their revenues from gold mining. It holds 28 stocks in its basket, with Canadian firms accounting for 58.6% of the portfolio, followed by Australian firms with a 27.5% share. Themes Gold Miners ETF has accumulated $10.4 million in its asset base. It charges 35 bps in fees per year and trades in a lower average daily volume of 7,000 shares.VanEck Junior Gold Miners ETF (GDXJ) VanEck Junior Gold Miners ETF offers exposure to small-capitalization companies that are involved primarily in the mining of gold and/or silver and tracks the MVIS Global Junior Gold Miners Index. Holding 92 stocks in its basket, Canadian firms dominate the fund's portfolio with a 47.8% share, whereas Australia (20.4%) and South Africa (6.4%) round out the top three. VanEck Junior Gold Miners ETF has an AUM of $5.7 billion and charges 51 bps in annual fees. It trades in a heavy volume of around 5 million shares a day on average.Global X Gold Explorers ETF (GOEX) Global X Gold Explorers ETF provides exposure to companies involved in the exploration of gold deposits and tracks the Solactive Global Gold Explorers & Developers Total Return Index. It is home to 51 stocks. Canadian firms dominate the fund's return at 54.1%, followed by Australia (27.6%) and the United States (8.8%). Global X Gold Explorers ETF is unpopular and illiquid, with an AUM of $66.5 million and an average daily volume of 17,000 shares. The expense ratio comes in at 0.65% (read: Should You Buy Gold or Gold Miners Now?).iShares MSCI Global Gold Miners ETF (RING) iShares MSCI Global Gold Miners ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 42 securities in its portfolio. Canadian firms take more than half of the portfolio, while the United States takes the next spot at 17.2% share. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. iShares MSCI Global Gold Miners ETF has been able to manage assets worth $1.5 billion and trades in a good volume of 275,000 shares per day.
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SPDR Gold Shares (GLD): ETF Research Reports
iShares Gold Trust (IAU): ETF Research Reports
VanEck Junior Gold Miners ETF (GDXJ): ETF Research Reports
iShares MSCI Global Gold Miners ETF (RING): ETF Research Reports
Sprott Gold Miners ETF (SGDM): ETF Research Reports
Global X Gold Explorers ETF (GOEX): ETF Research Reports
Themes Gold Miners ETF (AUMI): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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