Safe-haven ETFs regain appeal

Recent price increases, as well as market and geopolitical threats, could spur more demand

Safe-haven ETFs regain appeal
While the financial markets are focused on booming equity and bitcoin investments, it may be time to review the case for one classic safe-haven investment that could be back into style.

Bullion prices have hit a three-and-a-half month high as more investors recall the benefits of diversifying the traditional stock-and-bond portfolio. Gold-related ETFs are also on a tear: the US-listed SPDR Gold Shares ETF (GLD), the largest gold-linked ETF on the market, has risen 6.3% since its Dec. 11 lows. It has also advanced by 13% over one year, and ended 2017 with its biggest annual increase since 2010, reported

According to George Milling-Stanley, head of Gold Strategy at State Street Global Advisors, investors will want to look at gold ETFs to diversify as US equities reach record highs and the CBOE Volatility Index is at near-record lows. With valuations looking stretched in the extended bull market, he argues, there’s an increased risk of a pullback.

Milling-Stanley also cited geopolitical risks: North Korea’s military posturing, the persistent danger from the Islamic State, political unrest in Iran, and Russian territorial ambitions. That’s not to mention apprehension over what US President Donald Trump will decide to do next.

“All of these generate a good deal of safe haven investments,” he said.

Currently, COMEX gold futures are playing within the range of US$1,300 to US$1,350 per ounce. Milling-Stanley projects prices could advance further, reaching US$1,350 to US$1,400 in the year ahead.

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