Gold at $5,000? Here are the best ways to gain exposure to the metal
Gold has scaled a new peak, smashing past $4,000 an ounce, a milestone that’s set Wall Street abuzz. As the metal hits new highs, veteran hedge fund manager Ray Dalio has urged investors to allocate as much as 15% of their portfolio to gold, as debt levels, inflation and government spending erode confidence in paper assets and fiat currencies. Industry experts say there is still room for gold to to run. “We are now aiming for $5,000 in 2026. If it continues on its current path, it could reach $10,000 before the end of the decade,” Ed Yardeni, president of Yardeni Research, said in a note published Wednesday. Beyond the Federal Reserve’s pivot toward rate cuts and U.S. political uncertainty, a wave of central bank buying and renewed institutional interest have underpinned gold’s surge. Nicky Shiels, head of metals strategy at MKS Pamp, however, cautions the gold trade could be getting crowded: “Tactically, gold’s risen too much too fast — $500 in 25 days — and is around 25% above its 200-day moving average,” she said. “Historically a premium above 20% is short-lived,” Shiels added, expecting room for a pullback toward $3,600. For investors convinced by Dalio, here are they key ways of gaining exposure to the metal. Gold bars and jewelry Gold bars are useful if the objective is a long-term buy-and-hold position for investors looking to diversify their portfolio, and with the potential for transfer to the next generation where the near-term price movement is less relevant, said Gautam Chadda, head of strategic advisory in Asia at RBC Wealth Management. Jüerg Kiener, CEO of Swiss Asia Capital, added that “true ownership” of gold matters, as exchange-traded vehicles such ETFs are bound by agreements that can potentially limit exits. Some funds, especially those that hold physical gold or operate in less liquid markets, can impose a gate — a limit on redemptions — if too many investors try to cash out. “Ownership of the metal is key,” he told CNBC. However, other strategists noted that physical gold may not be the most cost effective when it comes to investing in the asset. “You need to find a safe place to store it, especially for gold bars,” said Eddy Loh, CIO of Maybank Group Wealth Management. The same concern arises with jewelry, which is also a traditional way of holding gold. “Older generations like it, but the resale value can be challenging — you usually have to sell at a discount,” says Loh. Fabrication costs and retail markups also mean buyers are generally paying above spot prices. ETFs: liquid and low cost? For wealth managers and retail investors in particular, exchange-traded funds remain a better way of taking a position in gold. “If I want to have gold exposure in a multi-asset portfolio, I think ETF is my preferred route,” Loh said. “It’s liquid, expense ratios are typically a bit lower, and it tracks the gold price closely.” Foord Asset Management’s portfolio manager Brian Arcese agrees but advises care in product selection. “For retail investors, we’d recommend purchasing physical gold through ETFs — importantly, investors should choose an ETF that is backed by physical gold itself and not created through the use of derivatives,” he said. A physically backed gold ETF owns gold bars in vaults. ETFs that use futures contracts rely on counterparties like banks and brokers to honor contracts and roll futures. The drawbacks can be counterparty risk for the manager and custodian, and it may be hard to redeem ETF units for physical gold, said RBC’s Gautam. “Investors also need to understand the different types of ETFs and how they gain exposure so some due diligence will be required when choosing a suitable instrument. Not all ETFs are created equal,” he said. CEO of Sprott Asset Management John Ciampaglia said that physically backed funds were “the easiest and most convenient way to gain access to London Good Delivery gold bars.” He pointed to the Sprott Physical Gold Trust, traded in New York and Toronto, with bullion stored at the Royal Canadian Mint. Gold mining stocks Gold miners can deliver leveraged upside if bullion keeps rallying, but holding equities comes with a different risk profile, according to market strategists. Arcese notes miners are “a relatively high beta way to gain exposure — their stock prices will be far more volatile than gold itself.” Still, he says some are “not pricing in the current spot price,” meaning profits could surprise if gold holds at $4,000. The NYSE Arca Gold Miners Index, which tracks large, publicly listed gold and companies globally, is up 126% year to date, data from LSEG showed. The MVIS Global Junior Gold Miners Index has gained 137% across the same period. Spot gold prices, meanwhile, are up 53% so far this year. Holding gold mining stocks comes with company-specific risks. “Operational issues like flooding or accidents can derail returns even if gold rallies,” warned Maybank’s Loh. For those seeking a basket approach, Ciampaglia suggests the Sprott Gold Miners ETF (SGDM), which holds some of the largest producers. But he and Kiener warned that popular mining-stock ETFs like the VanEck Gold Miners ETF(GDX) and VanEck Junior Gold Miners ETF(GDXJ) can be convenient for traders but may not be optimal long-term vehicles due to other embedded costs like management fees, portfolio turnover and trading spreads.
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