Australia-based Perth Mint, one of the world's largest gold refiners and one of the top five suppliers of bullion to international markets., created history on Jul 16 by showcasing the world's largest gold coin - 2,200 pounds - in front of the NYSE facing Fearless Girl statue. The idea was to promote the Perth Mint's gold exchange-traded fund, Perth Mint Physical Gold ETF AAAU , which hit the market in August, but has managed to amass only $133.3 million in assets so far.
More than $52 billion is currently poured into U.S. ETFs backed by gold bars stored in bank vaults, per Wall Street Journal. Gold has been a winner in the past three months (as of Jul 16, 2019). Gold bullion ETF SPDR Gold Trust GLD gained about 10% versus 3.6% advancement seen in the S&P 500. Global growth worries, trade war and geopolitical tensions have helped this safe-haven asset. Also, the Fed rate cut optimism took some strength off the U.S. dollar, which acted positively for gold price (read: Grab These ETFs & Stocks on Gold Rush ).
However,the Perth Mint's fund couldn't make the most of this rally. Since May 1, GLD attracted a sturdy asset base of $2.38 billion while AAAU has amassed only $15.47 million. So, many analysts believe that Perth intends to grab a huge market share.
How Special AAAU as an ETF Is?
Perth says it is the only gold ETF backed up by a government-guaranteed mint. "AAAU shares are backed by allocated gold secured within the Perth Mint's network of central bank grade vaults in Western Australia. The Perth Mint may, on rare occasions, store some gold in other highly secure vaults. All the gold held on behalf of AAAU is guaranteed by the Government of Western Australia ," per the issuer. The fund charges 18 bps in fees.
How Does It Fit In a Portfolio?
The second half of the year looks bright for gold investing. Gold may even touch $1550 (from the current level of $1422) in the next few months, per an analyst. Even if the Fed doesn't cut rates, it would at least not hike. So, overall easy policy would keep the dollar strength at check and boost gold prices .
Central banks' gold buying is yet another strength. Some of these contributed to a 7% rise in global gold demand in the first quarter from a year earlier, according to the World Gold Council, as published on Financial Times . Russia was the biggest buyer during the period, followed by China. The momentum carried on in the second quarter too.
Plus, AAAU's custodian/ sponsor is Perth Mint, which is wholly owned by the Government of Western Australia. Normally, investing in government-backed assets is perceived as more risk-free.
Having said that, we would like to note the space is teeming with gold bullion ETFs. These are GLD, iShares Gold Trust IAU , Aberdeen Standard Physical Swiss Gold Shares ETF SGOL , GraniteShares Gold Trust BAR and Van Eck Merk Gold Trust OUNZ . These funds have generated assets like $36.3 billion, $13.4 billion, $945 million, $546 million and $158.4 million, respectively. The fund charges 40 bps, 25 bps, 17 bps, 17 bps and 40 bps, respectively. From this context, we can conclude that AAAU charges pretty competitively (read: ETFs to Grab Amid Increased Odds for Fed Rate Cut ).
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares Gold Trust (IAU): ETF Research Reports VanEck Merk Gold Trust (OUNZ): ETF Research Reports Aberdeen Standard Physical Gold Shares ETF (SGOL): ETF Research Reports SPDR Gold Shares (GLD): ETF Research Reports GraniteShares Gold Trust (BAR): ETF Research Reports Perth Mint Physical Gold ETF (AAAU): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report