Investing in gold and gold mining

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Gold as an investment​

Gold is an asset that plays an essential role in an investment portfolio. Due to Its low correlation with the broad stock market, a gold investment has the potential to increase the risk-adjusted return in a portfolio that primarily consists of equities and interest rates. Historically, a gold investment has functioned as an effective portfolio protection, both against uncertainties/volatility in the market and as a protection against inflation.

Investing in a Gold mining Fund

Gold mining funds are a commodity fund that invests indirectly in gold through equity stakes in gold mining companies. Gold is an asset that plays an important role in an investment portfolio. Its low correlation with the broad stock market contributes to a higher risk-adjusted return in a portfolio that largely consists of equities and interest rates.

Invest in gold mining companies through a gold mining fund to get a leveraged bet on the price of gold while at the same time benefiting from dividends paid by the mining companies.

Gold commodity investment

A gold commodity investment has historically proven an efficient way to protect a traditional portfolio of stocks and bonds in times of market distress. Gold also acts as an inflation hedge, thereby protecting portfolios from value depreciation in times of rising prices. A gold investment plan is useful for every long-term investor to consider in order to get the highest risk-adjusted returns from a multi-asset portfolio.

How to invest in gold?

There are several ways to invest in gold:

  • Physical gold: You can buy the physical raw material and store it at home, or in another safe place.

  • ETCs (Exchange Traded Commodities): By buying an ETC, you own physical gold, but you do not have to take care of the storage yourself.

  • Derivatives: Investment products that follow the price of gold, but where you have a counterparty risk against the issuer of the product.

  • Shares: The share price of the mining companies that extract gold is strongly linked to the spot price for gold. Mining company shares often move more than the price of the underlying asset because you also add a company risk. This means that the share goes up more when e.g. the gold price goes up, and vice versa.

  • Funds: There are different types of gold investment funds. When you invest in a fund, you pay a fee for an expert (fund manager) to select the underlying assets that provide exposure to gold. A fund may include any of the options listed above. There are two types of funds:

    • Daily traded fund: Often actively managed, which means that an expert reviews the holdings and rebalances at regular intervals.

    • Exchange Traded Fund: A basket of securities that follows an index and is traded as a stock.

AuAg Fonder offers both daily traded funds and an ETF. The common denominator being that they focus on companies that extract gold and other precious metals. The AuAg Precious Green fund invests in physical precious metals, with a focus on gold, and companies active in the green technology space. The ETF AuAg ESG Gold Mining UCITS ETF (ESGO) enables investors to invest in gold mining. The fund offers exposure to an equally weighted basket of 25 ESG-screened companies active in the gold mining industry. The ETF follows the Solactive AuAg ESG Gold Mining Index, which focuses on companies with low ESG risk.

The daily traded funds can be traded via equity trading platforms such as Avanza and Nordnet. In addition to these platforms, the ETF can be traded on international exchanges such as Deutsche Boerse Xetra, Borsa Italiana and the London Stock Exchange.

Why invest in gold mining companies with AuAg Funds?

  • AuAg Fonder offers funds that focus on providing exposure to precious metals and elements in green technology. What they have in common is that these assets offer protection against monetary inflation and are necessary in the transition to a green economy – trends that are highly topical today.

  • AuAg's funds fit well into a portfolio of traditional assets as they have low correlation with equities in particular. An example of a gold mining fund is the AuAg ESG Gold Mining UCITS ETF

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