Is gold a good hedge against inflations?

Gold has worked as a good hedge for inflation in the past. It has also acted as a store of value and a safe heaven asset during recessions. During the last 50 years and 5 big stock market crashes, gold price has remained relatively stable or even risen a bit.

Why invest in gold mining companies instead of the gold directly?

Investing in gold mining companies gives you the same advantage as investing in gold as the stock price returns are correlated with the price of the metal itself but it also provides other advantages. Gold mining companies can pay dividends, they also have a potential to create additional value by optimizing operations and discovering new gold reserves which gives a leveraged exposure to the gold market.

What are the risks of Gold Miners ETF?

Investing in companies involved in production of basic materials carries the risks of being exposed to changes in political and economic conditions like environmental policies and import controls.

Gold ETF

Glittering in Good and Bad Times

Marketing Communication

Introducing VanEck's Gold ETFs for diversified exposure to leading gold and silver mining companies. It offers a proven historical hedge against inflation and a safe haven during economic turmoil. Investors can strategically choose between more mature industry giants and dynamic junior companies in the gold sector, tailoring their portfolios to align with individual risk preferences. As the global economy experiences uncertainties, the Gold ETFs provide an efficient and streamlined means to tap into the potential growth of precious metal investments, backed by VanEck's expertise. Whether safeguarding against inflation or seeking growth, it offers a strategic gateway to the world of precious metals, empowering investors in navigating the evolving financial landscape.

What are Gold ETFs?

At VanEck we empower investors with the choice of investing in either mature or junior gold mining companies. Each type of miners comes with its unique features and properties, providing a comprehensive exposure to the gold mining sector. Mature and larger companies operate well-established projects and have been generating consistent cash flows over time, often distributing profits to investors in the form of dividends. Junior miners instead offer a more speculative approach, being mostly involved in the exploration and discovery phases of new mines. Accordingly they offer a leveraged exposure to gold prices, amplifying its movements in both directions.

VanEck Gold Miners UCITS ETF

The world's largest gold and silver mining companies.
Established firms, with stable cash flows.
Can be core of gold allocation.

ETF Details

Basis-Ticker: GDX
ISIN: IE00BQQP9F84

TER: 0.53%
AUM: $1.4 B (as of 08-11-2024)
SFDR Classification: Article 6

Lower risk

Higher risk

Typically lower reward

Typically higher reward

VanEck Junior Gold Miners UCITS ETF

The world's most liquid junior gold and silver mining companies.
Young firms in exploration phase. Upside from gold discovery.
Heightened sensitivity to the gold price.

ETF Details

Basis-Ticker: GDXJ
ISIN: IE00BQQP9G91

TER: 0.55%
AUM: $537.4 M (as of 08-11-2024)
SFDR Classification: Article 6

Lower risk

Higher risk

Typically lower reward

Typically higher reward

Can this ETF Be a Safe Haven for Investors?

Historically, gold has given the ultimate protection from stock market falls and black swan events in the past 50 years. During that period’s six big stock market crashes, the gold price has risen or remained relatively stable. VanEck's Gold ETF Suite can provide the opportunity to exploit such property of the precious metal.

Store of Value
Safe Haven
Inflation Hedging
Low Correlation

Store of Value

Gold has been a store of value for thousands of years – also in the last century. While inflation has eroded the value of the US dollar, the world’s reserve currency, by 96% since 1913, gold has only grown in value so far.

Source: Bloomberg, Federal Reserve Bank of St. Louis, VanEck. Past performance is no guarantee for future results.

Gold Has Acted as a Safe Haven in the Past

Top 5 Equity Drawdowns since 1970

Note that gold miners are equities and have been significantly impacted in the past by stock market drawdowns.

Past performance is not a reliable indicator for future performance. Source: VanEck analysis, based on Bloomberg data. Data for the period 01/01/1970 - 16/04/2024. Equities are represented by the MSCI World Net Total Return USD Index. Gold by the LBMA Gold Price PM USD Index.

Gold Has Acted as a Hedge for Inflation in the Past

Gold has moved in lockstep with (inverted) real rates, which reflect inflation expectations.

Gold Price vs Real Rates

Source: Bloomberg, Federal Reserve Bank of St. Louis, VanEck. Data for the period 01/01/1982 – 01/03/2024. Past performance is no guarantee for future results.

Gold has traditionally exhibited a contained correlation with other asset classes, thus enhancing its diversification function within a portfolio.

Gold Correlation with Other Asset Classes

Source: World Gold Council.

Gold represented by the LBMA Gold Price PM USD Index, US equities by the MSCI US Total Return Index, emerging markets equities by the MSCI EM Total Return Index, commodities by the Bloomberg Commodities Total Return Index, developed markets equities ex US by the MSCI World ex US Total Return Index, US bond market by the Bloomberg Barclays US Bond Aggregate, global government bonds ex US by the Bloomberg Barclays Global Treasury ex US.

Correlation calculated on weekly returns from 28/03/2014 to 31/03/2024.

What are Gold ETFs opportunities?

By allocating to this Fund, investors can benefit from the gold miners’ growth potential. This stems from new explorations and gold discoveries as well as from a diversified and stable demand. Gold is in fact characterized by several diversified sources of demand which have proven to be resilient over time.

Gold Miners Benefit from Diversified and Robust Demand
Attractive Fundamentals

Demand for gold has historically been diversified and resilient. Gold is in fact used broadly in jewellery and technological devices as well as it is often held as reserve by central banks around the world. Moreover, many investors perceive it as a safe haven and inflation hedge for their portfolios, thus seeing a clear investment rationale for the precious metal. All these use cases underscore the robustness of gold’s demand, with the Gold ETF poised to potentially benefit from it.

Gold's Diversified Demand

Source: World Gold Council, demand measured in tonnes.

Gold Miner Premium/Discount to Gold

Gold miners are trading at a significant discount to gold at a time when balance sheets, cash flow generation and capital allocation strategies have never been stronger.

Source: Scotiabank. Data as of March 2024. Premium/Discount” represented by the average of the percentage difference between the current gold price and that required by Scotiabank’s company models to attain a net asset value per share equal to each underlying companies’ current share price. Past performance is not indicative of future results.

What are advantages of Gold ETFs?

VanEck's Gold ETF, with its two variants, provides exposure to the world’s leading gold and silver mining companies, rather than holding the precious metal directly. Their stock prices returns are correlated with gold and silver prices, but they also have the following advantages.

Gold Mining Shares Pay Dividends
While gold and silver mining shares typically pay dividends, holding physical gold...

Gold ETF Offers Leveraged Exposure to Gold Price
Historically, gold mining stock prices have risen more than the gold price...

Potential to Access Value Creation Through Gold ETF
Mining companies boost stock price returns by discovering new gold and silver...

Key Documents and Links

KID

Prospectus

Fund page

Main Risk Factors of a Gold ETF

Risk of Investing in Smaller Companies
Industry or Sector Concentration Risk
Risk of Investing in Natural Resources Companies

The securities of smaller companies may be more volatile and less liquid than the securities of large companies. Smaller companies, when compared with larger companies, may have a shorter history of operations, fewer financial resources, less competitive strength, may have a less diversified product line, may be more susceptible to market pressure and may have a smaller market for their securities.

The Fund’s assets may be concentrated in one or more particular sectors or industries. The Fund may be subject to the risk that economic, political or other conditions that have a negative effect on the relevant sectors or industries will negatively impact the Fund's performance to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries.

Investments in natural resources and natural resources companies, which include companies engaged in alternatives (e.g., water and alternative energy), base and industrial metals, energy and precious metals, are very dependent on the demand for, and supply and price of, natural resources and can be significantly affected by events relating to these industries, including international political and economic developments, embargoes, tariffs, inflation, weather and natural disasters, limits on exploration, often changes in the supply and demand for natural resources and other factors.

Please contact us for more information:

Phone: +31 (0)20 719 51 00
Email: EMEAinfo@vaneck.com