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Investors looking for stability in a volatile market may find that physical gold is a better option compared to gold stocks. This sentiment is echoed by George Milling-Stanley, an expert in the field of gold and the chief gold strategist at State Street Global Advisors. According to Milling-Stanley, owning gold bars provides a layer of protection against potential weaknesses in the equity market. Unlike gold mining stocks, which are still tied to the equity market and can decline when the market experiences a downturn, physical gold offers a level of security that investors may find appealing in uncertain times.

State Street Global Advisors offers two exchange-traded funds that track the performance of the spot price of gold: the SPDR Gold Shares ETF (GLD) and SPDR Gold MiniShares Trust (GLDM). While both funds have seen a 15% increase year to date, they do have key distinctions that cater to different types of investors based on their trading preferences and investment strategies. GLD, with a gross expense ratio of 0.40%, is ideal for traders or tactical players looking for quick movements in the market. On the other hand, GLDM, with a lower expense ratio of 0.10%, is better suited for investors looking to hold a large amount of gold for the long term.

Contrary to the belief that gold is a traditional and outdated investment, Milling-Stanley points out that millennials are increasingly allocating a portion of their portfolios to gold. State Street’s 2023 Gold ETF Impact Study revealed that millennials are more inclined to invest in gold compared to older generations. This shift in preference comes as bitcoin gains traction among younger investors from both the millennial and Gen Z demographics. While a Policygenius survey highlighted that millennials are more likely to own bitcoin than any other asset class, such as stocks, bonds, or real estate, Milling-Stanley contends that gold and bitcoin serve different investment purposes and don’t necessarily compete for the same pool of assets.

While bitcoin may appeal to investors looking for quick gains through tactical trading, gold remains a stable and reliable asset for long-term investors seeking security. Milling-Stanley acknowledges that bitcoin could pose competition for individuals aiming to capitalize on short-term price movements in gold. However, he emphasizes that the intrinsic qualities of gold, including its physical presence and historical value, make it a unique investment that stands apart from digital assets like bitcoin.

The choice between physical gold and gold stocks ultimately depends on an investor’s risk tolerance, investment horizon, and trading strategy. While gold stocks may offer potential returns tied to the performance of the equity market, physical gold provides a tangible hedge against market volatility and economic uncertainty. As the investment landscape continues to evolve, incorporating a diversified portfolio that includes both traditional assets like gold and emerging assets like bitcoin may offer investors a balanced approach to wealth preservation and growth.

Finance

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