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The strong performance of gold prices – whose 10.9% rise this year smashes silver and platinum’s 4.3% and 1.2% gains – is expected to continue over the next 10 years.
To profit from that, Money Morning Small-Cap Specialist Sid Riggs just recommended what he believes is the best gold ETF to buy now.
This fund offers much higher returns than physical gold. In fact, shares of the fund have shown to double the gold price’s return.
Sid is so bullish on this pick, he calls today’s gold exchange-traded fund (ETF) “the best ‘stock’ of the next decade.” He refers to it as a “stock” since ETFs can be traded on the market just like regular stocks. An ETF has its own ticker and offers shares that you can buy and sell through your broker or online brokerage account.
And Sid has identified the biggest reason gold prices will keep rallying, lifting our gold ETF pick at the same time…
The Biggest Factor That Will Push Our Gold ETF Higher
The bullish factor will be the growing mismatch between supply and demand in the market for physical gold.
You see, demand for gold is rising, while supply is declining. That’s pushing prices higher. Gold is up 10.8% on the year, and it continues to rise.
This year, demand for gold jewelry is increasing the demand for physical gold. The most recent data from the World Gold Council shows global demand for gold jewelry climbed 8%, from 446.8 tonnes in Q2 2016 to 480.8 in Q2 2017.
As demand rose this year, the supply of gold fell. The total gold supply around the world fell 8% so far this year.
Sid says global gold production is expected to shrink 40% in 2018. That will inevitably lower global supply in the coming years, which will boost gold prices over the same time as long as the demand for gold doesn’t fall. Money Morning Resource Specialist Peter Krauth also predicts gold to rise 9.5% to $1,400 within just the next three months.
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Investors and traders are quickly recognizing gold-backed ETFs as a way to profit from this mismatched supply and demand. Gold ETF holdings surged by 31.4 tonnes in August – the highest monthly rise of 2017 – to meet investor demand. The increase was worth approximately $1.57 billion.
But we don’t recommend buying just any gold ETF. Instead, we’re showing you the best gold ETF to buy today, which Sid has called the “best ‘stock’ of the next decade.”
Here’s his ETF recommendation – and why it’s a better play than other gold ETFs…
The Best Gold ETF to Buy and Hold for the Next Decade
Sid recommends the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE Arca: GOAU) as the best gold investment for the next 10 years.
GOAU has largely been flying under the radar since it was launched on June 28. The fund mostly tracks the performance of the U.S. Global Go Gold Precious Metal Miners Index (GOAUX). This index follows the performance of 29 precious metal mining companies, including gold mining and streaming companies.
A gold royalty and streaming firm makes a deal with a gold mining company to buy its production at a fixed price. That kind of agreement can give streaming companies – like the ones tracked by GOAU – the upper hand, because they can buy gold at a discount if the price of gold suddenly jumps before they receive the miner’s supply.
Royalty and streaming firms make up most of GOAU’s largest holdings due to these companies’ profitability and cost efficiency. The fund’s second-biggest holding – Royal Gold Inc. (Nasdaq: RGLD) – makes up 9.8% of the fund’s total weight. Shares of RGLD have surged 8.7% since GOAU’s June 28 debut.
Sid also likes GOAU since the fund managers choose companies to track based on revenue per employee. This is different from popular gold ETFs like the SPDR Gold Trust ETF (NYSE Arca: GLD) that choose stocks to track based on market cap.
By focusing on revenue per employee, GOAU is able to avoid companies that build up debt to finance their operations.
“The net result is that GOAU automatically favors companies with solid balance sheets and management over companies with weaker balance sheets and riskier teams at the top.”
With a stable portfolio of efficient streaming companies and a unique way of choosing stocks to hold, GOAU is Sid’s pick for the “best ‘stock’ of the next decade.”
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The post This Brand-New Gold ETF Could Be the “Best ‘Stock’ of the Next Decade” appeared first on Money Morning – We Make Investing Profitable.
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