The sharp rally in gold bullion and gold-linked exchange-traded funds (ETF) has drawn attention from investors seeking protection against geopolitical uncertainty and inflation.
However, VanEck Asia-Pacific chief executive and managing director Arian Neiron cautioned that while gold remains a defensive cornerstone, investing in gold miners exposes investors to additional layers of risk.
“Gold miners present a leveraged way to gain exposure to gold, typically they tend to outperform gold bullion when the price rises and underperform if the gold price falls. Gold mining companies are also generally well-positioned to deliver,” Neiron told InvestorDaily.
He added that gold itself is less volatile, offering steadier returns.
“While gold is a passive asset driven by macroeconomic trends, miners add an additional layer of exposure to operational performance and cost structures,” Neiron said.
“Historically, gold miners have shown a low correlation to global equities, potentially helping to reduce overall portfolio volatility during periods of market stress. That said, they also carry equity-like risks and investors should assess their portfolio objectives and risk tolerance accordingly.”
Gold rose to successive record highs in recent weeks, climbing to a new record of US$3,546.90 on Wednesday, supported by stagflation fears, expectations of lower US interest rates and strong ETF inflows. These movements recently prompted Global X to forecast the price could test US$4,000 as early as next year, with some analysts projecting it could even surpass US$4,300 by 2026.
Neiron further told InvestorDaily that gold’s latest rally reflects more than just short-term market sentiment.
“Gold is considered the ultimate hedge against uncertainty and the price surge reflects lingering concerns over macroeconomic instability, including the unresolved trade, high sovereign debt levels and the many geopolitical flashpoints,” he said.
He also noted that central banks’ long-term commitment to diversifying reserves has provided structural support.
“The uptick in gold purchasing also appears anchored to a long-term commitment by central banks to diversify reserves and is supported by gold’s role as an inflation hedge and strong performance in times of crisis.”
Recent global ETF flows have underscored this demand. The World Gold Council recently reported that inflows were the strongest since mid-April, while futures net longs and options positioning also shifted sharply higher.
Moreover, Australian investors are on track to allocate more than $1 billion to gold ETFs this year, potentially nearing the record $1.3 billion set in 2020, according to Global X.
VanEck’s own Gold Miners ETF (GDX) rose 19.7 per cent in August, surpassing $1 billion in assets under management and outpacing global equities by 67.7 percentage points year to date.
