Investors could be face-to-face with a golden opportunity, according to one fund manager.
While gold prices had a strong start to the year, mounting an impressive February rally, they have erased most of those gains, now up less than 1 percent for 2019 versus the S&P 500’s 12 percent rise.
But the recent losses could be pushing gold prices to buyable levels, Will Rhind, CEO of fund management company GraniteShares ETFs, said Monday on CNBC’s “ETF Edge.”
“You’ve had a bit of a V-shaped recovery in the market, but [with] gold prices selling off, this could well be a buying opportunity for gold at this point,” said Rhind, whose company offers a low-fee, gold-tracking exchange-traded fund called the GraniteShares Gold Trust.
“The world is slowing down,” Rhind said. “That’s a weaker dollar platform in my mind, one of the key things that helps drive gold prices. So, for me, I think: Look at this price and think about defensive positioning.”
Rhind suggested that investors who want to take advantage of a potential global slowdown — the likes of which typically sends gold prices soaring as market watchers look to hedge against big losses — consider funds like his, which brands itself as “The Low-Cost Gold ETF.”
“For a lot of people, the fees will be the most important thing,” Rhind said. “I think a lot of people will focus on that, as they rightfully should, because low fees are important. But we also added other differentiators, like holding the gold in a different location to other ETFs [and] having audit checks two times a year, for example, into the vault where we send people in and actually check the bars.”
And with demand for gold picking up in places like China, where inflation is driving investors toward the historically safe yellow metal, and huge mergers by gold companies centralizing the supply, prices might not stay low for long, Rhind warned.
“Companies can’t find these big new gold finds out there, so they’re buying each other’s capacity, and so that’s why you’re seeing these mega mergers going on in the space,” he said. “And … we don’t have to talk about peak gold, but what we’re saying is there are no major new discoveries, and therefore supply is going to be more constrained.”
Gold prices are practically flat this year and down more than 3.5 percent in the last 12 months. They have been on an uptrend this month that is largely tied to a weaker dollar and ongoing uncertainty surrounding Brexit.