Gold is one of this year's best-performing assets. As of Sept. 18, the largest ETF backed by physical holdings of the commodity was beating the S&P 500 by a margin of nearly 3-to-1. The gap between equities and the S&P 500 was even wider at roughly 8-to-1. Impressive showings, to be sure. It's arguably enough to make market participants ignore the fact that gold is essentially a no-income asset. Traditional gold ETFs offer no income streams, while the largest miners ETF sports a small dividend yield of 0.56 ...

All that said, then, where might investors look for real diversification? The yellow metal, even more so than other alternatives, remains a powerful way to protect investments. Where real estate, for example, risks exposure to rising materials costs, gold's commodity status means mining drives much of its price. The Goldman Sachs Physical Gold ETF (AAAU) offers one strong candidate in the gold ETF space. The fund tracks the gold spot price, providing physical exposure to physical gold. That direct exposure ...

Economic Landscape and Gold Prices - The current economic environment is characterized by rising uncertainty and fragile investor confidence, with comments from Fed Chair Jerome Powell, geopolitical tensions, and increasing inflation expectations contributing to a rally in gold prices [1][3] - Strong fundamental indicators suggest that gold's gains could extend into late 2025 and 2026, making a case for increased portfolio allocation towards gold [1] Interest Rate Expectations - Powell's recent speech indicated a potential interest rate cut, which is expected to boost gold prices as the U.S. dollar typically weakens with rate cuts, making gold more attractive [3][4] - The CME FedWatch tool shows an 87.3% likelihood of a rate cut in September, up from 75% prior to Powell's speech, with even higher probabilities for subsequent months [4] Dollar Value and Gold Demand - A weaker U.S. dollar, which has fallen approximately 7.79% over the past six months, is expected to further lift gold prices as it increases demand for gold among foreign buyers [5][6] Inflation Expectations - Rising inflation expectations, with a 12-month forecast increasing to 4.9% in August from 4.5%, and long-term expectations rising to 3.9% from 3.4%, make gold an attractive hedge against inflation [8][7] Central Bank Activity - Central banks are increasingly strengthening their gold reserves, which may drive up gold prices amid ongoing geopolitical and economic instability [9] Investment Strategies - Investors are encouraged to adopt a long-term passive investment strategy in gold, viewing it as a hedge against market volatility, and to consider a "buy-the-dip" approach [11] - Recommended ETFs for gold exposure include SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and others, with GLD being the most liquid option [12][13] Performance of Gold ETFs - GLD has an asset base of $102.67 billion, the largest among gold ETFs, and has gained about 35.6% over the past year, while GLDM and IAU are the cheapest options for long-term investing [13]

Group 1: Economic and Market Conditions - Persistent economic uncertainty and a volatile global trade landscape have elevated investors' anxiety, providing strong tailwinds for gold [1] - Mounting U.S. debt concerns, unfavorable inflation data, and central banks' increasing purchases of gold have contributed to its sustained appeal [1] - Concerns over U.S. debt levels can add pressure to investor confidence, making investors risk-averse and increasing the demand for safe-haven assets [7] Group 2: Central Bank Activity - Central banks are increasingly focused on strengthening their gold reserves to guard against potential financial shocks amid rising global debt and geopolitical risks [5] - Approximately 95% of the 73 central banks surveyed expect their global counterparts to increase gold holdings over the coming year, highlighting gold's enduring appeal as a strategic asset [6] - A major driver of gold's strength is the growing appetite among emerging market central banks to increase their gold reserves [6] Group 3: Inflation and Safe-Haven Demand - Gold preserves its purchasing power across extended investment periods, outpacing inflation and diversifying an investment portfolio [3] - The Consumer Price Index rose 0.3% in June, lifting the annual inflation rate to 2.7%, which has boosted gold's safe-haven status [4] - Analysts expect gold prices to benefit from soaring U.S. deficits and growing fiscal instability, even in the absence of an immediate crisis [8] Group 4: Investment Strategies - Investors should adopt a "buy-the-dip" strategy for gold, as it remains an essential hedge amid increasing macroeconomic uncertainty and geopolitical volatility [2] - A long-term passive investment strategy is recommended to weather short-term market storms, especially given the current economic and geopolitical climate [10] - Increasing exposure to gold ETFs is suggested as a smarter play than attempting to time the market [11] Group 5: Gold ETFs - Investors can consider various gold ETFs such as SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and others to enhance their exposure to gold [12] - GLD has an asset base of $102.12 billion, making it the largest among the options, and has gained 15.5% over the past three months and about 39.2% over the past year [13] - GLDM is noted as the cheapest option for long-term investing, charging an annual fee of 0.10% [13]