In a volatile market, investors are often looking for safe havens to protect their assets. According to George Milling-Stanley, a renowned expert in the gold industry and the chief gold strategist at State Street Global Advisors, physical gold might be a better option compared to gold stocks. Milling-Stanley believes that owning gold bars provides him with protection against potential weaknesses in the equity market. He argues that when the equity market experiences a downturn, gold mining stocks, being equities themselves, tend to follow suit and decline in value. This lack of added protection is what makes physical gold a more appealing option for some investors.
Milling-Stanley’s firm manages two exchange-traded funds (ETFs) that track the performance of the spot price of gold: the SPDR Gold Shares ETF (GLD) and SPDR Gold MiniShares Trust (GLDM). The main difference between the two lies in their gross expense ratios, with GLD standing at 0.40% and GLDM at 0.10%. This discrepancy also plays a role in attracting different types of investors. Milling-Stanley explains that if you are a trader or a tactical player who needs to act quickly, the liquidity of GLD, established over 20 years, provides low trading costs. On the other hand, if you have a substantial amount to invest and intend to leave it untouched, GLDM with its lower expense ratio might be the more suitable choice.
As of the most recent data, both GLD and GLDM have seen a 15% increase year to date, painting a positive picture for gold investors. Contrary to the traditional view of gold as a conservative investment choice, Milling-Stanley notes that the metal is gaining traction, especially among younger generations. State Street’s 2023 Gold ETF Impact Study revealed that millennials are allocating more of their portfolios to gold compared to older investors, indicating a shift in the perception of gold as an asset class.
The rise of cryptocurrencies, particularly bitcoin, has led some to believe that gold and bitcoin are competing for the same investor pool. However, Milling-Stanley believes that the two assets serve different purposes. While bitcoin might attract those looking for quick gains through tactical trading, gold appeals to investors seeking stability and long-term value. He acknowledges that bitcoin could be seen as a competitor in certain scenarios but maintains that the fundamentals of gold as a tangible asset remain strong.
The debate between physical gold and gold stocks continues to spark interest among investors. With changing market dynamics and the rise of alternative asset classes like cryptocurrencies, the decision to invest in gold requires careful consideration. While gold stocks offer exposure to the metal through equities, owning physical gold provides a sense of security and stability during uncertain times. Ultimately, the choice between the two comes down to individual investment goals and risk tolerance levels.