Leaders from Harvest ETFs outline why they’re still constructive on gold, outline new strategy
Pure play gold bullion exposure worked extremely well for investors until the outbreak of the US-Iran war. from March of 2024 until March of this year, gold prices rose from roughly $2,200 (USD) per ounce to over $5,200 (USD) per ounce. That growth of around 130 per cent was driven by a host of factors. Central banks, especially in emerging markets, added to gold stores as they reduced their US dollar exposures. Retail demand for gold surged as investors looked to hedge against risks. Trade policy and global reshoring made allocations to gold more attractive and those who held either bullion or gold mining stocks enjoyed landmark performance, especially in 2025.
This year, however, war-induced flight to liquidity has initiated a roughly 24 per cent pullback in the price of gold. While the yellow metal remains elevated relative to its historic average, the recent swoon in gold prices may prompt a reconsideration of gold allocations going forward. Mike Dragosits, Portfolio Manager at Harvest ETFs in Oakville, believes the long-term drivers for gold remain intact, even as he says there can be new ways to find gold returns.
“Interest rate expectations have moved from a definite cut to now talk of potential hikes [in the US], which has been a shift in the short-term dynamics for the gold space. The war narrative has subsided a bit too, which has seen gold pull back as a safe haven,” Dragosits says. “There’s also a bit of a competing narrative with that because while holders of gold appreciate having that hard asset, there’s also a potential to use it for a flight to liquidity and cash in times of stress, especially with its massive run over the past couple years. But, I would still say there are four key areas that make gold very attractive for investors still.”
Can gold still hedge risk at current prices?
In Dragosits view, those four drivers are a wider erosion of trust in institutions and central banks, the ongoing de-dollarization and gold stockpiling by non-Western central banks, ongoing geopolitical uncertainty, and high levels of fiscal debt in the developed world. Put simply, as people lose trust in their governments and institutions, they turn to gold.
As gold rose past $4,000 and then $5,000 (USD) per ounce, there was some speculation that the yellow metal had lost its qualities as a risk hedge and had started to behave like a risk-on asset. Dragosits disagrees with that view and notes that while other commodities have appeared as a stronger risk hedge in an inflationary cycle, that performance is only short-term. He argues that if and when equity markets begin to sell off and shift into a risk-off cycle and bond yields pull back, there should be a resumption of gold’s position as a risk hedge. In the meantime, he argues that there could be better, or at least different, ways for investors to access gold equities
Harvest ETFs, he explains, is offering a gold strategy with more differentiated sources of return. Their new Harvest Premium Yield Gold ETF (HPYG) combines exposures to gold bullion and gold mining equities with leverage and a call and put options strategy to pay out income. It’s a strategy that comes with far more moving parts than many investors might expect from their gold allocations, but the team at Harvest ETFs believes the income components of the portfolio suit a gold allocation that has corrected this year.
“Bullion isn’t earning clients any income. They’ve been on that ride. We hit an all-time high in 2026 in January. And then we pulled back and clients have held and felt every bit of that,” explains Avinash D’Souza, VP of Product Strategy at Harvest ETFs. “HPYG gives you an opportunity to earn income from those positions and get access to growth potential as well.”
How a gold options ETF works
Dragosits and D’Souza explained that their new ETF holds allocations both to physical bullion through a US-listed gold ETF and a portfolio of gold equities held in Harvest’s HGGG index ETF. It also holds an exposure to Harvest’s Canadian T-Bill ETF, which serves as the source of cash used for the ETF’s put writing strategy.
Through writing puts on gold equities, Dragosits explains that Harvest can generate income in the immediate term while they commit to purchase gold equities at lower prices. Those holdings can then be used to sell covered calls or to maintain more long exposure to gold equities under the expectation that markets will revert higher. Dragosits likens the product to a wheel, where equities are bought when prices come down and sold off when prices rise through covered call options, resulting in a more neutral weight in the portfolio. Right now the ETF targets eight gold equities, each a large-cap name with deep and liquid options markets. D’Souza sees the product as more of a complete gold portfolio, offering more than simple bullion exposure would provide.
While Dragosits doesn’t believe the old means of accessing gold is broken, he sees a product with more moving parts and more sources of return as worth consideration given the relatively unique position of gold markets today.
“We’ve had a really big run up in gold prices and they have come off. Now, who knows where they go from here. They could go up or they could come down,” Dragosits says. “And if they’re going to come down, we’re going to be able to capitalize on being able to purchase additional equity exposure into the gold market, which is something that investors generally look for in their portfolios as a diversifying holding over longer periods. We can access better prices now better and get paid to wait for better prices if they do arise in the future. And if they don’t, we have the covered call side which is capitalizing on any potential movements to the upside where we can sell stock at higher levels.”
