Editor’s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we’re going to pick one of those stocks and use Magnifi Personal to compare it with its peers or competitors. Here we go…
Investors are betting on further increases in the price of gold after it touched a 12-month high in late March.
The reasons are twofold: first, the Federal Reserve’s cycle of interest rate rises appears to be over (despite oil rising again), and second, gold makes for a safe haven during banking sector turmoil.
Aakash Doshi, head of commodities for North America at Citigroup, told the Financial Times there had been a surge in investor activity in recent weeks. “The big catalyst has been the stress in the regional banking system in the U.S.… [and] it has been pretty much one-directional buying,” he said.
March was set to be the first month of net inflows into gold ETFs for 10 months. In addition, the volume of bullish options bets tied to gold funds has approached record levels.
Call options are a bullish bet that give investors the right to buy assets at a set price at a later date. By late March, the five-day rolling volume of call options on the SPDR Gold Trust ETF (GLD) had surged more than five-fold since the start of the month.
There was a similar increase in interest in CME’s gold futures and options tied to them, including deep “out-of-the-money” options, which would only pay out if the gold price hits new all-time highs.
And it’s not smaller investors or speculators jumping onto the gold bandwagon. Over the past few years, a key source of demand has been central bank buying. Between 2020 and 2022, central bank purchases went up 4.5 times!
Financial advisors sometimes recommend having some gold as an insurance policy against financial markets calamities.
So, let’s say you do want to add some gold to your portfolio. Then you face the choice between whether to go with a physical gold ETF or with an ETF that focuses on gold stocks.
Our colleague Serge Berger discussed this recently — is physical gold better, or gold stocks?
We thought we’d do a comparison of the two ETFs Serge talked about — the aforementioned GLD and the VanEck Gold Miners ETF (GDX). The quick and easy way to do this is to ask Magnifi Personal to run the comparison. It’s as simple as asking this investing AI to “Compare GLD to GDX.”
This is an example of a response using Magnifi Personal. This image is not a recommendation or individual advice. Please see bottom disclaimer for additional information, including INO.com’s relationship with Magnifi.
As you can see, over three years GDX is (not surprisingly) more volatile, but its returns are greater than for GLD. So, it looks to be a wash. Just make sure you have some monies in gold for protection.
This is just a starting point, of course. Magnifi Personal can easily compare several stocks or ETFs on more criteria, such as dividend payments, turnover, volume, and so on. Magnifi Personal makes research like this as simple as typing in a question.
To have Magnifi Personal run similar comparisons for you, or to dive deeper into this one and compare the two Gold stocks using different criteria, click here.
This ability to have an investing AI pore over reams of data for you in seconds and spit out an easy-to-understand comparison of two or more stocks is an invaluable tool in deciding where to invest next.
We recommend you try it out. Click here to see how.
Latest from Magnifi Learn: Financial literacy is a fundamental aspect of wealth management and security. Since April is Financial Literacy Month, we’ve decided to devote today’s segment entirely to the topic!
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