Gold price has broken its 7-year high as market risks continue to loom over global financial markets. As equity markets have rejoiced over the re-opening of segments within the global economy, concerns of a 2nd wave lurks in the shadows. Gold ETFs have been seeing a steady stream of inflows as investors cushion their portfolio with Gold exposure amidst the volatility. And with the additional threats by the US to stoke up geopolitical tensions, analysts are expecting the price of the precious metal to continue its steady climb in the near-term.
Market vulnerabilities lend support for Gold price
- US Fed Chairman reported that more elaborate downside risk is expected from the US economy, and believes that the pandemic could imprint a longer lasting damage.
- Market uncertainties are expected to escalate further with more geopolitical unease between the US and China as President Trump continue to recklessly throw out threats.
- Economic data from the US have already indicated devastating weakness in its industrial production, and retail sales numbers, not to mention record unemployment rates. These would likely be prolonged as economies remain in lockdown.
- With the near term expectations of a weak economic landscape globally, and the low interest rate environment that we are in, support for Gold price is expected to continue.
- The LBMA Gold price is up 21.2% YTD in MYR terms as at last Friday, as most major equity indices remain in the red.
What’s the best way to gain exposure?
- Physical backed Gold ETFs have been the go to option for investors
- Track price movements of physical Gold.
- Conveniently traded on the stock exchange through a broker.
- The largest Gold ETF in the US saw 118 million inflows into the Fund, to bring its Fund size to 1.3 billion.
- Non-physical backed Gold ETFs
- Also conveniently traded on the stock exchange through a broker.
- Tracks price movement of physical Gold… until it doesn’t. Non-physical backed ETFs would generally obtain its exposure through derivatives, such as futures.
- While this option may potentially provide lower fees (no need for storage fees to safekeep the physical Gold bars), prices of futures may move at its own accord. Remember when Oil futures contracts dipped into negative territory? (Read our article on Lessons to Draw Upon from the Recent Plunge in Crude Oil Futures for more)
- Gold miners / producers
- This is generally the option when investing into unit trust funds given the regulatory guidelines that forbids unit trust funds from investing into physical commodities.
- Evidently, stock price of gold miners will not necessarily be tied to the movement of gold price though there would be some correlation. (But if you want to eat fish, why would you buy a fisherman? Similar concept)
TradePlus - We've got you covered
- TradePlus Shariah Gold Tracker, or more commonly referred to by its Bursa Stock Code 0828EA, is a physically backed Gold ETF that is listed on Bursa.
- The 0828EA is benchmarked against the LBMA Gold Price, and buys into Gold bars with 99.9 fineness through accredited LBMA Gold refiners.
- The ETF is the first, and remains the only Shariah-compliant commodity-backed ETF that is listed on Bursa.
- With Amanie Advisors Sdn Bhd as its Shariah advisor, the ETF is subject to annual reviews to ensure that its processes and procedures adhere to the Shariah principles.
- As a Shariah-complaint ETF, investors who are looking to trade the ETF through their preferred broker may be required to contact their broker prior to trading to ensure their accounts have sufficient funds prior to trading as a cash-upfront payment is required.
- Trading at a minimum board lot size of 100 units on Bursa, investors can gain access to Gold price for less than RM300.
- The 0828EA is also the preferred Gold ETF by Wahed Investment – the online Shariah-investment platform that allows investors to start investing with as little as RM100.
Get in touch with the ETF team if you would like to more.
Learn more about TradePlus ETFs
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Warning Statement: A copy of the Prospectus and Supplemental Prospectus can be obtained at Affin Hwang Asset Management's (“Affin Hwang AM”) website at www.tradeplus.com.my. Investors are advised to read and understand the contents of TradePlus Shariah Gold Tracker's (or the “Fund”) Prospectus dated 28 November 2017 and Supplemental Prospectus dated 2 July 2019 before investing. The Prospectus / Supplemental Prospectus has been registered with the Securities Commission Malaysia ("SC"), who takes no responsibility for its contents. There are fees and charges involved when investing in the Fund. Investors are advised to consider the fees and charges as well of the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. The price of units and distribution payable, if any, may go down as well as up and past performance of the fund should not be taken as indicative of its future performance. SC takes no responsibilities for the contents of this marketing / promotional material and expressly disclaims all liability, however arising from this marketing / promotional material.