Attention in the capital markets is strictly focused on whether investors can count on more stimulus measures before the forthcoming U.S. presidential election. Gold is as steady as she goes pre-election, but with rising coronavirus cases, can it tick higher before voters head to the polls?
Per a Kitco News article, "Investor demand is holding relatively steady, in line with the recent price action, according to the latest trade data from the Commodity Futures Trading Commission (CFTC). Hedge funds remain active investors in the gold market; however, analysts have noted that nobody is making significant bullish or bearish bets ahead of the Nov. 3 U.S. General Election."
"With a Biden win increasingly being priced in, some may have decided to step aside until after November 3. Not least considering the memory of 2016 when the Trump win helped trigger a 15% correction in the weeks following the election," said Ole Hansen, head of commodity strategy at Saxo Bank.
How do ETFS Fit In?
"The market is still long, especially the ETFs and I suspect people may want to bank a little bit whilst the market shows no signs of going anywhere. However, I personally would remain long and look to add to that on any profit-taking pullback," said David Govett, founder of Govett Precious Metals.
This all bodes well for gold ETFs like the VanEck Merk Gold Trust (OUNZ). OUNZ seeks to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold in exchange for those shares. The Trust’s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust’s operations.
Each share represents a fractional undivided beneficial interest in the Trust’s net assets. The Trust’s assets consist principally of gold held on the Trust’s behalf in financial institutions for safekeeping.
OUNZ offers investors:
- Deliverability: VanEck Merk Gold Trust holds gold bullion in the form of allocated London Bars. It differentiates itself by providing investors with the option to take physical delivery of gold bullion in exchange for their shares.
- Convertibility: For the purpose of facilitating delivery, Merk has developed a proprietary process for the conversion of London Bars into gold coins and bars in denominations investors may desire.
- Tax Efficiency: Taking delivery of gold is not a taxable event as investors merely take possession of what they already own: the gold.
As mentioned, one of the key benefits of OUNZ is the ability to exchange shares of the ETF for physical gold. Per the fund’s website, if you’re an “investor interested in taking delivery of physical gold in exchange for your OUNZ shares (Delivery Applicants), you must submit a signed Delivery Application to Merk Investments LLC (the 'Sponsor').”
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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.