April 2, 2026

Archives for April 2022

Gold ETF Holdings Surge in 2022

April 20, 2022 by Leave a Comment

The SPDR Gold Shares Trust (GLD) continues to power higher in 2022 with a year-to-date gain of 7.5%.  The value of gold holdings of the GLD from the beginning of the year increased by over $11 billion to $68.13 billion.  Total gold held in trust by the GLD now amounts to over 1,106 tonnes.

The GLD hit an all time high during early March when it reached $191.50.  The demand for gold has increased due to of control inflation, a war in Europe that is spinning out of control, rampant money printing by the Federal Reserve and reckless spending by the Federal government.

Here are some basic facts about the GLD:

  • An investment in GLD allows investors to purchase an interest in gold without the costs of purchasing, transporting, insuring and storage of gold bullion or coins.
  • The fund expenses of the GLD are a modest 0.40% and allow an investor to purchase gold in whatever amount is desired, saving the cost of commissions and shipping on gold bullion.
  • The GLD does not give the buyer the right to receive gold bullion in lieu of shares purchased.
  • Purchases and sales can be done at any time during the trading day.  The GLD has excellent liquidity and the discount or premium from the value of gold bullion held is usually minimal.

Gold has been going steadily upwards since 2016 with minor pullbacks during 2018 and 2021.

The return on the GLD from date of inception on November 18, 2004 has been 8.36%.  In an uncertain world future returns look brighter every day.

 

 

Filed Under: Featured, Gold Tagged With: , , ,

The Downside to Rising Gold Prices

April 11, 2022 by Leave a Comment

Investors in gold have reason to cheer as gold prices rise but there is a definite downside to increased prices. Impoverished populations that lack the basics of human comfort have no choice except to mine gold regardless of the environmental consequences.

Although large gold miners do not use mercury, small mines frequently use mercury in the separation and recovery of gold from ore extracts. Besides the danger of handling mercury and breathing the vapors, vast environmental damage is being done in the process of gold recovery, as documented by Bloomberg.

Lax supervision and outright support of informal mining by Brazilian authorities were behind a 46% jump in Yanomami land degradation last year in the form of deforestation and contamination of water and soil, according to a report released Monday.

Artisanal miners known as garimpo have wrecked 3,272 hectares (8,085 acres), with the size of the area doubling since 2018, according to the latest edition of “Yanomami Under Attack,” which is prepared by community groups with support by Brazilian conservation group Instituto Socioambiental. Their presence is also introducing more disease, weapons and alcohol.

The Yanomami are facing a second big gold rush since the 1980s, with an estimated 20,000 illegal miners inside an area of forest that straddles Brazil and Venezuela. The growing threat to remote Amazon communities comes as the administration of President Jair Bolsonaro plans to allow mining on indigenous lands in a bill that’s even opposed by large mining companies. As lawmakers prepare to vote, about 7,000 indigenous people are camped out in the nation’s capital in protest.

This situation seems to be beyond the control of local governments and like many other world problems are insurmountable.

Filed Under: Other Precious Metals

What is the Best Way to Invest in Gold?

April 11, 2022 by Leave a Comment

Major Gold Mining Stock Outperforms Bullion and Gold ETFs

Investors in gold often wonder about the best way to own the precious metal.  Gold is gold but depending on the vehicle used to purchase gold, investment returns can vary dramatically.

Simply put, the three basic ways to invest in gold are gold bullion, gold bullion ETFs, and gold mining stocks.

Gold Bullion

Purchasers of gold bullion may not trust “paper gold” or they may simply appreciate the beauty of gold bars and coins.  There is an innate satisfaction in being able to physically admire and touch gold, a metal that has had value to man since before the dawn of civilization.  Paper currencies always eventually wind up worthless while gold will maintain purchasing power.  The pleasure of owning physical gold does have drawbacks, the biggest of which is security and storage.

Although gold has moved up dramatically since 2019, the current price of around $1,950 is still slightly below the record high of $2,061 reached in August 2020.

gold Technical chart [Kitco Inc.]

Gold Bullion ETFs

An easy and low-cost method for purchasing gold bullion is by investing in gold bullion ETFs.  Funds put into gold ETFs are invested in physical gold and the fund is responsible for physical security.  The largest gold ETF is the SPDR Gold Shares (GLD) which currently holds about $68 billion in assets.  The ETF has a relatively low expense ratio of 0.40%.  The GLD will closely match the move in the price of gold bullion less the expenses of running the fund.

The GLD currently trades at $181.47 slightly below its high of $190.81 reached in August 2020.

Another ETF worthy of consideration is the iShares Gold Trust (IAU) which currently trades at $36.97, holds $32 billion in physical gold and has an expense ratio of only 0.25%.

Gold Mining Stocks

Gold mining stocks are where it all starts.  Someone must undertake the expensive process of locating and mining gold ore to produce refined gold.  The profit generated by the gold mining stocks depends not only on the price of gold but also on how efficiently gold mining companies are at exploration and deploying capital.  Many junior gold mining companies have not been able to participate in price gains despite the increase in gold prices.

There are two ways to invest in gold mining companies.  An investor can invest in a basket of gold mining stocks in a mutual fund or ETF such as VanEck Gold Miners ETF (GDX) or by purchasing individual gold mining companies.  Purchasing an ETF allows an investor to spread risk across the industry.  Purchasing a successful gold mining company can result in gains that far exceed the increase in gold bullion.

For example, the GDX currently trades at $39.67, below the price reached in August 2020.

Now, look at the performance of Newmont Corporation (NEM) a major gold mining company which has recently exploded to an all-time high and up 173% since late 2019.

There is no way to know which way of investing will work out best until after it happens.  Always diversify to reduce risk is probable the best advice.

Filed Under: Featured, Gold, Gold Stocks Tagged With: , , , , , , , ,