Strong Dollar Grounds Gold Despite Soaring Inflation
Gold's traditionally positive performance in an inflationary and rising rates environment is hindered by the strength of the U.S. dollar.
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Risk: You may lose money up to the total loss of your investment due to the Main Risk Factors such as market risk and volatility, risk of investing in smaller companies and risk of investing in gold and silver mining companies which are described below and in the sales prospectus.
Historically, gold has given the ultimate protection from stock market falls in the past 50 years. During that period’s five big stock market crashes, the gold price has risen or remained relatively stable.
Gold has been a store of value for thousands of years – also in the last century. While inflation has eroded the value of the US dollar, the world’s reserve currency, by 96% since 1913, gold has only grown in value so far.
Source: Bloomberg, Federal Reserve Bank of St. Louis, VanEck. Past performance is no guarantee for future results.
Top 5 Equity Drawdowns since 1970
Past performance is not a reliable indicator for future performance. Source: VanEck analysis, based on Bloomberg data. Data for the period 01/01/1970 - 06/08/2021. Equities are represented by the MSCI World Net Total Return USD Index. Gold by the LBMA Gold Price PM USD Index.
Gold production has reached a plateau and discoveries could lead to significant price increases for miners.
Gold Discoveries and Exploration Spending: 1990 to 2021
Source: S&P Global Market Intelligence. Data as of June 2021.
Gold has moved in lockstep with (inverted) real rates, which reflect inflation expectations.
Gold Price vs Real Rates
Source: Bloomberg, Federal Reserve Bank of St. Louis, VanEck. Data for the period 28/2/1997 – 12/11/2021. Past performance is no guarantee for future results.
Risk: Investors should consider risks before investing. See dedicated risk factors section on this website.
The ETFs provide exposure to the world’s leading gold and silver mining companies, rather than holding the precious metal directly. Their stock prices returns are correlated with gold and silver prices, but they also have the following advantages:
Our Gold Miners and Junior Gold Miners ETFs offer a choice in how to invest. While the former gives exposure to established gold mining companies, the latter provides greater exposure to new exploration and higher sensitivity to the gold price.
ISIN: IE00BQQP9F84
ISIN: IE00BQQP9G91
The Funds will be sensitive to changes in, and its performance will depend to a greater extent on, the overall condition of gold and silver ore mining companies.
The securities of smaller companies may be more volatile and less liquid than the securities of large companies. Smaller companies, when compared with larger companies, may have a shorter history of operations, fewer financial resources, less competitive strength, may have a less diversified product line, may be more susceptible to market pressure and may have a smaller market for their securities.
Companies engaged in the production and distribution of basic materials may be adversely affected by changes in world events, political and economic conditions, energy conservation, environmental policies, commodity price volatility, changes in exchange rates, imposition of import controls, increased competition, depletion of resources and labour relations.
The value of investments and the income from them, and therefore the value of and income from the shares can go down as well as up and an investor may not get back the amount invested. The ETFs’ exposure is based on the performance of the Index securities which, in turn, is exposed to general market movements (negative as well as positive). The prices of the securities in the Funds are subject to the risks associated with investing in the securities market, including general economic conditions and sudden and unpredictable drops in value. An investment in the Funds may lose money.
For more information on risks, please see the “Risk Factors” section of the relevant Fund’s prospectus, available on www.vaneck.com.
Gold's traditionally positive performance in an inflationary and rising rates environment is hindered by the strength of the U.S. dollar.
Read Blog