How to bet on gold without buying it, with traditional funds or ETFs

How to bet on gold without buying it, with traditional funds or ETFs
How to bet on gold without buying it, with traditional funds or ETFs

Gold soars around 13% since the start of the year, far ahead of the CAC 40 (+ 1.1% as of June 19, after the decline since the dissolution of the National Assembly). The yellow metal thus reached 2,330 dollars (around 2,170 euros) per ounce, after breaking several records in recent months. French political instability could today renew the interest of certain savers in this safe haven. But “the rise in prices is largely explained by massive purchases of gold by emerging central banks, notably China, to the tune of 1,000 tonnes per year since 2022, more than double the historical average”explains Charles-Edouard Bilbault, manager at Rothschild & Co Asset Management.

This movement is expected to continue, as the Chinese central bank seeks to reduce its dependence on the dollar.

Individuals wishing to take advantage of this favorable environment can purchase gold in the form of bars or coins. But it is also possible to bet on the rise of the yellow metal with financial investments such as Exchange Traded Commodities (ETC) or “exchange-traded commodity funds”. These financial investments replicating the evolution of the price of gold are a type ofExchange Traded Funds (ETF) or “traded index funds”. Their outstanding amount: 102 billion dollars in Europe.

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They are backed by physical gold. “Our ETC Invesco Physical Gold holds 202 tonnes of gold, in the form of bars, in the vaults of our partner JP Morgan Bank in London”explains Thibaud de Cherisey, head of EMEA ETF distribution at Invesco, whose product has assets of 14 billion euros, neck and neck with iShares Physical Gold.

A financial product

The main advantage of ETCs compared to physical gold held directly, these products can be bought and sold as simply as a share, with any stock exchange broker, since they are listed on Euronext. Transaction fees are very low through an online broker (often less than 0.5%), while you have to pay 2% to 3% commission in a pharmacy specializing in the sale of coins and of ingots. “Management fees for gold ETCs are limited to 0.12% for the cheapest, an extremely low level for these products which nevertheless require physical handling”believes Mr. de Cherisey.

The purchase of physical gold also raises the question of safe storage in a safe, at home or in a bank branch offering this service. But paper gold presents a counterparty risk: the investor does not hold gold, but a financial product, with the risk, linked to the issuer, which results from it.

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