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Is Physical Gold the Safe Haven in a Volatile Market? Expert Says Yes

As markets fluctuate, experts recommend physical gold as a hedge. State Street's gold strategist weighs in on gold vs mining stocks and the rise of gold among younger investors.

Is Physical Gold the Safe Haven in a Volatile Market? Expert Says Yes

Gold has long been considered a safe haven investment, but with a volatile market, is it still the best option? According to George Milling-Stanley, chief gold strategist at State Street Global Advisors, the answer is yes, especially when compared to gold mining stocks.


Milling-Stanley emphasizes the vulnerability of mining stocks during market downturns. "They're equities, and they tend to go down with the general level of the equity market," he told CNBC. Physical gold, however, offers a potential hedge against such weakness.
While State Street offers gold-backed ETFs (Exchange Traded Funds) like the popular SPDR Gold Shares ETF (GLD) and the lower-cost SPDR Gold MiniShares Trust (GLDM), Milling-Stanley acknowledges the differences between these options and physical gold.


For active traders who need quick movement, GLD's high liquidity translates to lower trading costs. However, for long-term investors, GLDM's lower expense ratio makes it the more attractive choice. Both GLD and GLDM have seen a significant rise in value year-to-date, reflecting the growing interest in gold.Beyond the "Fuddy-Duddy" Image: Gold Attracts Millennials. Milling-Stanley dispels the myth of gold being an outdated investment. State Street's 2023 Gold ETF Impact Study revealed a surprising trend: millennials hold a greater share of gold in their portfolios compared to older generations.


This surge in gold's popularity among younger demographics coincides with the ongoing fascination with Bitcoin. A recent Policygenius survey suggests millennials are more likely to own Bitcoin than any other generation, while Gen Z prioritizes Bitcoin over traditional investments like stocks, bonds, or real estate.

Gold vs Bitcoin: Complementary Assets, Not Competitors?
Milling-Stanley acknowledges Bitcoin's potential competition for short-term, price-driven gold investments. However, he believes Bitcoin doesn't compete in the long-term strategic allocation space, where gold truly shines.

"I think Bitcoin may well offer competition there," he said regarding short-term trading. "But I don't think that Bitcoin really competes in terms of a long-term strategic allocation, and that's where I think gold really comes into its own."


Final Thoughts: Diversification is Key
While gold offers stability and potential protection during economic downturns, it's important to remember diversification is crucial for any investment strategy. Consulting with a financial advisor can help you determine the right mix of assets, including gold, to achieve your financial goals.

 


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