Gold is an asset like no other. For thousands of years, it’s been considered a currency, a commodity and an investment, representing a store of value in different market environments. This historic ability to endure in many economic climates has earnt gold a safe haven reputation amongst the investment community.
Despite its prized status though, gold wasn’t a viable investment opportunity for many investors until access was democratised through exchange-traded commodities (ETCs). Physically backed gold ETCs have been available to European investors since 2004. But is it still a relevant portfolio allocation in today’s world?
The investment case for gold certainly remains as enduring as the precious metal itself – and may continue to justify a role in investment portfolios. With low correlation to core asset classes1, a finite supply due to natural scarcity and independence from central bank policy, gold can be used as a defensive asset during periods of inflation, as a geopolitical hedge, as a diversifier in a multi-asset portfolio, and as an important tool in wealth preservation.
Creator of Europe’s first physically backed gold ETC
A leading provider of gold ETCs with $23.7 Bn
Approximately 20 years of expertise managing physical gold ETCs
Broadest range of gold ETCs in Europe with 12 products
We have developed a robust and impartial model that assesses the key factors influencing the price of gold. Notably, our gold model describes gold as more of a monetary asset than a commodity.
The WisdomTree Gold Outlook Model
Historically gold has been a hedge against rising prices as inflation tends to lift its value when fiat currencies lose their purchasing power. In a disinflationary environment, gold sometimes declines in price.
Gold is highly influenced by monetary factors, particularly the strength of the US Dollar (USD). When the US Dollar increases relative to other currencies, the price of gold in USD tends to fall and vice versa.
We have identified an inverse relationship between nominal yields on 10-year US Treasuries and the price of gold, meaning that the price of gold often rises when interest rates are falling, and falls in price when interest rates are rising.
The WisdomTree Gold Outlook Model
Historically gold has been a hedge against rising prices as inflation tends to lift its value when fiat currencies lose their purchasing power. In a disinflationary environment, gold sometimes declines in price.
Gold is highly influenced by monetary factors, particularly the strength of the US Dollar (USD). When the US Dollar increases relative to other currencies, the price of gold in USD tends to fall and vice versa.
We have identified an inverse relationship between nominal yields on 10-year US Treasuries and the price of gold, meaning that the price of gold often rises when interest rates are falling, and falls in price when interest rates are rising.
The WisdomTree Gold Outlook Model
Historically gold has been a hedge against rising prices as inflation tends to lift its value when fiat currencies lose their purchasing power. In a disinflationary environment, gold sometimes declines in price.
Gold is highly influenced by monetary factors, particularly the strength of the US Dollar (USD). When the US Dollar increases relative to other currencies, the price of gold in USD tends to fall and vice versa.
We have identified an inverse relationship between nominal yields on 10-year US Treasuries and the price of gold, meaning that the price of gold often rises when interest rates are falling, and falls in price when interest rates are rising.
We offer a comprehensive range of physical gold ETCs that cater for different investor objectives and preferences. They provide easy and cost-efficient exposure to gold bullion held in vaults in London or Zurich from reputable and highly secure custodians. The physical replication delivers exposure to the spot price of gold and all bars conform to the London Bullion Market Association (LBMA) Good Delivery standards.
WGLD / GLDW
WisdomTree Core Physical Gold is designed to offer security holders a simple, cost-efficient and secure way to access physical gold by providing a return equivalent to the movements in the physical gold spot price less the applicable management fee.
SGBS / SGBX
WisdomTree Physical Swiss Gold is designed to offer security holders a simple, cost-efficient and secure way to access physical gold by providing a return equivalent to the movements in the physical gold spot price less the applicable management fee.
GBSP
WisdomTree Physical Gold - GBP Daily Hedged is designed to offer security holders a simple, cost-efficient and secure way to access physical gold while mitigating the impact of currency risk. It provides exposure to the movement of the physical gold spot price less the applicable management fee, with a daily currency hedge against exchange rate movements (GBP Hedged).
GBSE
WisdomTree Physical Gold - EUR Daily Hedged is designed to offer security holders a simple, cost-efficient and secure way to access physical gold while mitigating the impact of currency risk. It provides exposure to the movement of the physical gold spot price less the applicable management fee, with a daily currency hedge against exchange rate movements (EUR Hedged).
| WisdomTree Core Physical Gold (WGLD/GLDW) | WisdomTree Physical Swiss Gold (SGBS/SGBX) | WisdomTree Physical Gold – GBP Daily Hedged (GBSP) | WisdomTree Physical Gold – EUR Daily Hedged (GBSE) | |
|---|---|---|---|---|
| Exposure | Physically backed – spot gold | Physically backed – spot gold | Physically backed – spot gold GBP hedged | Physically backed – spot gold EUR hedged |
| Vault location | London, United Kingdom | Zurich, Switzerland | London, United Kingdom | London, United Kingdom |
| Custodian | HSBC Bank plc | JP Morgan Chase Bank N.A. | JP Morgan Chase Bank N.A. | JP Morgan Chase Bank N.A. |
| Base currency | USD | USD | GBP | EUR |
| Currency hedged | No | No | Yes - Daily | Yes - Daily |
| Management fee | 0.12% p.a. | 0.15% p.a. | 0.12% p.a. | 0.12% p.a. |
| Responsible gold | Yes | Yes | Yes | Yes |
| Physical delivery option | Yes | Yes | No | No |
Full details on our range of physical gold ETCs can be found here.
In addition to physical gold, we also offer products with synthetic and short and leveraged exposure to the price of gold, as well as other precious metals. View the full range.
| Gold ETCs | Physical Gold Bullion | Gold Mining Shares | Gold Futures | ||
|---|---|---|---|---|---|
| Convenient and accessible | ✓ Listed on exchange and traded like shares during market hours | ✕ Requires safe delivery, secure storage and insurance | ✓ Shares bought and sold on exchange | ✕ Inaccessible to a wide variety of investors and requires contract ‘rolling’ to avoid taking physical delivery of gold | |
| Underlying gold price exposure | ✓ Tracks movements in the gold price | ✓ Direct exposure to the value of physical gold bullion | ✕ Tracks mining companies, which can be affected by several factors not related to gold price | ✓ Tracks the gold price through futures exposure | |
| Cost-effective and transparent | ✓ Simple and transparent fee structure | ✓ Small bars and coins are bought at a premium and there are additional costs for storage and insurance of bullion | ✓ Typical costs are those associated with holding shares though certain exceptions apply | ✓ Can be cost-effective for those with the necessary infrastructure | |
| ISA and SIPP eligible | ✓ Listed on exchange and traded like shares during market hours | ✕ Requires safe delivery, secure storage and insurance | ✓ Shares bought and sold on exchange | ✕ Inaccessible to a wide variety of investors and requires contract ‘rolling’ to avoid taking physical delivery of gold |
For more information, watch our video about Physically Backed ETCs.
In 2012 the London Bullion Market Association (LBMA) implemented the Responsible Gold Guidance (RGG) to ensure gold sourced from LBMA Good Delivery refiners is free from threat financing. The RGG is part of the LBMA’s wider Responsible Sourcing programme which aims to combat money laundering, terrorist financing and human rights abuses around the world.
In 2019 the LBMA added Environmental, Social and Governance (ESG) assessments to the RGG, encouraging Good Delivery refiners to strengthen corporate engagement with miners and recyclers, and to review the environmental impacts of their supply chain. In January 2022, the LBMA implemented its latest guidance which requires refiners to provide further detail on ESG risk assessments compared to earlier iterations.
WisdomTree physical gold exchange-traded commodities (ETCs) are backed by 100%* responsible gold bars produced after 2012, and we’re working closely with custodians to increase our exposure to post-2019 and 2022 bullion across all our ETCs. In December 2020, we launched the WisdomTree Core Physical Gold (WGLD) ETC which applies the highest responsible gold standards with custodians asked to act on a best-efforts basis to only allocate bars from 2019 or later.
Discover the evolution of responsible gold through the supply chain and WisdomTree’s commitment to sustainable gold in our Physical Gold ETCs on our responsible gold page.
*As of 29 September 2023
1Core asset classes including equities, bonds and property.
2AUM figure as of day before.
Nitesh Shah
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