The stage is set for gold to shine as bullion makes an ideal hedge for stubborn inflation, according to Bank of America. “That rare thing, an uncorrelated anti-stagflation hedge,” Jared Woodard, the firm’s investment and exchange-traded funds strategist, said of gold. “Gold is worth owning for the times when financial assets offer negative real returns.” The Wall Street firm on Wednesday initiated coverage of gold ETFs with a “favorable” view. The strategist said that gold is one of the few assets with no correlation to stocks and that it’s also robust against stagflation. Gold futures have risen more than 8% this year to top $2,000 an ounce as investors sought safety amid a weakening economy. Bank of America said the precious metal has become particularly appealing as the opportunity cost of financial assets dips. “When corporate profits are falling, bonds are overpriced, cash lags inflation and major currencies are leaking value, the anti-speculative intransigence of gold is a feature,” Woodard said. “When the opportunity cost of missing out on stocks and bonds is low, the gold price gets high.” Here are the five bullion ETFs that Bank of America is highlighting: iShares Gold Trust Micro (IAUM) SPDR Gold MiniShares Trust (GLDM) abrdn Gold Shares ETF (SGOL) iShares Gold Trust (IAU) SPDR Gold Shares (GLD) Out of these funds, Bank of America’s top-rated ones are GLDM and IAUM. The strategist said these newer “mini” funds have lower expenses than their peers, but they have the same fundamentals backed by physically held gold bullion. — CNBC’s Michael Bloom contributed to this report.
