Is IAU iShares Gold Trust A Good Buy?

🌟🌟🌟Gold prices have recently spiked as economic and geopolitical uncertainty have driven investors towards Gold as a safe haven asset.  $iShares Gold Trust(IAU)$  offers exposure to Gold as it is designed to track the spot price of Gold Bullion by holding gold bars in a secure vault.  This allows investors to free themselves from finding a place to store Gold. 

Gold price  had climbed to new highs in 2024 and it looks like it will continue to climb to another new high in 2025.  Gold reached a record high of USD 2790 in October 2024 and some experts are predicting it could break the USD 3,000 barrier before long. 

Gold is currently priced just below its all time high at over USD 2789 per troy ounce.   Total Gold demand last year surpassed USD 100 billion for the first time in the 3rd quarter.  This is according to Juan Carlos Artigas who is the Global Head of Research at the World Gold Council.   Gold price has been increasing and is up by almost 80% in the past 5 years. 

With Donald Trump's return as the 47th US President, concerns of tariffs could push up US consumer prices, increase inflation and lead to interest rates staying higher for longer. 

The latest news is that this has become a reality as President Donald Trump has announced new tariffs on Mexico, Canada and China on Saturday.  These tariffs will amount to a significant 25% duty on all imports from Mexico and most goods from Canada and 10% tariff on Chinese goods imported into the US. 

These new tariffs could lead to potentially much higher costs, disrupted supply chains and the loss of jobs. 

Hours after Donald Trump's action, Canadian Prime Minister Trudeau announced a retaliatory 25% tariffs on US goods. 

However tariffs are unpopular among economists who largely agree that they can cause inflation.  That is because importers, not the countries exporting the goods, pay the tax.  Ultimately the cost is passed onto consumers in the form of higher prices. 

Mexico, China and Canada are US 3 largest trade partners.   Mexico exported USD 467 billion worth of goods to the US while China is USD 401 billion and Canada is USD 377 billion in 2024. 

It is not surprising that IAU hit a 52 week high recently at USD 53.17.   IAU is the 2nd largest Gold ETF after $SPDR Gold Shares(GLD)$  which is the largest Gold ETF.  However IAU has a lower expense ratio of 0.25% compared to GLD which is 0.40%.

Performance wise IAU is up 5.3% year todate and 37% in 2024, beating $SPDR S&P 500 ETF Trust(SPY)$  performance of 21% in 2024.

Central banks have been buying Gold, causing its price to soar with unprecedented purchases from India, China and even Russia to hedge against global economic fragmentation.  

Wall Street Analysts are bullish on Gold prices with Goldman Sachs expecting Gold to clear the USD 3,000 mark by the end of 2025.  

I have invested in IAU 10 months ago as a defensive hedge against inflation.  I also like its lower entry point of USD 52.87 at the last closing on Friday compared to GLD which is USD 258.56.

I believe that it is good to hold $iShares Gold Trust(IAU)$  as part of my diversified portfolio.  Gold has long been recognised as a safe haven asset in times of geopolitical conflicts as well as a hedge against inflation. 

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