Less demand for gold of out China and India will require some buying in order to keep gold prices heading upwards. However, with a forthcoming U.S. presidential election on the way, demand should rise, according to TD Securities.
"While the pace of gold accumulation remains elevated by historical standards, the hypothetical drag created from low physical demand in India and China demands substantial investment buying in order to offset that drag," TD Securities commodity strategists said via a Kitco News report.
"Investment appetite for gold will continue to rise, particularly in the period that follows the U.S. election. In fact, we reiterate that the long gold trade is likely agnostic to the election outcome — and gold bugs need not look too far on the horizon to expect a large-scale fiscal deal that could de-bottleneck the ongoing real rate suppression," the strategists added. "Both the Trump and Biden agendas estimated to cost between $5.0T and $5.6T over the next decade … That being said, we expect that a Blue Wave would lead to global reflation, which would be the most positive outcome for gold bugs."
Investors looking to get gold exposure can look at funds like SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.
As a backdoor play, ETF investors can get gold exposure via miners using the following funds:
- VanEck Vectors Gold Miners (NYSEArca: GDX): seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Gold Miners Index®. The index is a modified market-capitalization weighted index primarily comprised of publicly traded companies involved in the mining for gold and silver.
- Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG): seeks daily investment results, before fees and expenses, of 200% of the daily performance of the MVIS Global Junior Gold Miners Index. The index includes companies from markets that are freely investable to foreign investors, including “emerging markets,” as that term is defined by the index provider.
- Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT): seeks daily investment results, before fees and expenses, of 200% of the daily performance of the NYSE Arca Gold Miners Index. The index is comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold and, in mining for silver.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.