Investors looking to weather a volatile market may choose physical gold over gold stocks.
So says George Milling-Stanley, one of the world’s gold experts and chief gold strategist at State Street Global Advisors.
“One of the reasons I own gold bullion is because I believe it provides me with some protection against potential weakness in the stock market,” Milling-Stanley said on CNBC’s “ETF Edge” this week. “When the stock market falls, shares of gold mining companies Remember, these are stocks and they tend to fall with the overall stock market level. So they don’t offer me an extra layer of protection.”
The Milling-Stanley firm manages two exchange-traded funds that track the dynamics of the spot price of gold: SPDR Gold Shares ETF (GLD) and SPDR Gold MiniShares Trust (GLDM).
According to Milling-Stanley, they differ in gross expense ratios – 0.40% for GLD and 0.10% for GLDM – and it is this key difference that also differentiates the type of investors they attract.
“If you’re someone who wants to trade… or if you want to be a tactical player – meaning you need to be able to move very, very quickly – then the liquidity of GLD after 20 years means it’s a very, very low trading cost compared to with any other gold ETF,” he said. “If you have a million dollars and want to invest a million dollars in gold and leave it there, then GLDM with its lower expense ratio makes more sense to you.”
As of Thursday’s close, shares of GLD and GLDM were up 15% year to date.
Bullion, Bitcoin and Boomers
The idea that gold According to Milling-Stanley, “junk” investments no longer ring true. State Street 2023 Gold ETF Impact Study found that millennials have a larger portion of their portfolios allocated to gold than older generations.
The metal’s popularity among younger investors is growing as Bitcoin continues to attract holdings from both millennials and Gen Z. Political genius A survey released this week found that millennials are more likely to own bitcoin than any other generation, and Gen Z is more likely to own bitcoin than stocks, bonds or real estate.
But Milling-Stanley rejected the idea that gold and bitcoin compete for assets in all directions.
“Bitcoin may well provide some competition to people who want to take a tactical position on gold and just wait for the price to rise and sell. I think Bitcoin could very well compete here,” he said. “But I don’t think Bitcoin really competes in terms of long-term strategic allocation, and that’s where I think gold really comes into its own.”
Denial of responsibility