Why consider investing in gold?

Celebrating 15 years with our Physical Gold ETC

Listen to Paul Syms and Kathy Kriskey discuss what's been driving the gold price and what to look out for in the future.



Hello and welcome to this interview focused on gold. My name is Paul Syms and I head up product management for Invesco’s European fixed income and commodity exchange traded products and I’m delighted to be joined today by Kathy Kriskey, our senior commodity strategist who is based in our New York office.


Hi Kathy. It’s good to catch up and I want to talk about what’s going on with gold! When we launched our gold product 15 years ago $1,000 was the big barrier. So far this year, gold has been rallying aggressively and recently broke through $2,400 an ounce. Can you give us a quick recap of how we got here?



Hi Paul. Wow, what an interesting 15 years it’s been for this precious metal! I think it’s important to remember that gold has played an important role in the development of society throughout time, initially used for ceremonial rites, and later as a global currency and store of value.

So, let’s go back even further to 1971, when the US left the Bretton Woods system, which was set up after WWII, fixing exchange rates between gold and the USD. This led to a surge in gold prices going from $40/oz to $660/oz by 1980. It was a time of severe economic uncertainty with stagflation in the US, high inflation, low economic growth and high unemployment. Let’s hope we are not heading back to that situation anytime soon!

After that, gold was stable for 20 years, but in the 2000’s it really started to shine with the impacts of the Global Financial Crisis and the following Great Recession, when investors sought a flight to safety. From 2001 to 2012, gold went from $300/oz to $1,700. These were turbulent times, with the European sovereign debt crisis also supporting gold prices.

Things started to normalize as the US Federal Reserve ceased its quantitative easing and the USD strengthened, bringing gold back down to $1,200 by late 2014.

The covid pandemic of 2020 also impacted the gold market, with its unprecedented disruptions to every part of our lives and economies, ultimately pushing prices higher than $2,000/oz.

Until this recent move up, gold stayed basically in a range of $1,700 – 1,900.



Which gets us to where we are now. What are the main drivers today? We’ve seen the increased demand from central banks, do you think they will remain big buyers?



The major driver for gold hitting its historic high is about Emerging Market Central Bank buying in a move to “de-dollarize” their reserves and retail demand for physical bars and coins. The central banks increasing their gold holdings are China, Turkey, India, Poland, Kazakhstan, Singapore, Russia and the Czech Republic. The freezing of Russia’s USD-based reserves after their invasion of Ukraine concerned central banks around the world, and their purchases of bullion doubled, according to the World Gold Council. 

On retail demand, Chinese consumers, nervous about their economy, currency and property sector, have ramped up their purchases of physical gold, with March being the highest level seen in seven years. This retail demand isn’t just coming from China, as Costco in the US is now offering gold bars to consumers. Increasing global government debt is also causing investors to look for diversification away from government bonds and currencies. We also have two active wars, which make gold attractive as a perceived safe-haven. These investors are buying both physical gold and exchange traded products which hold physical gold.  

Another factor which normally impacts gold prices is interest rates. Although you guys in Europe got your first rate cut recently, those of us on the other side of the pond are still waiting for the start of our easing cycle. The Fed is communicating that we might stay higher for longer on rates and that isn’t great for gold prices. The eventual Fed easing, hopefully by the end of the year, should support prices, but some precious metal investors may stay on the sidelines until that happens.



Now the big question is where we go from here. Instead of asking you for your prediction, I’d like to get your views on a couple of scenarios. First, what would you see over the next year as providing a bullish case for the gold price?


While gold prices are already high, relatively, we still haven’t seen interest rates in the US come down, and as we all know, gold doesn’t pay any interest so when other investments like bonds earn less interest, gold looks attractive. And inflation in the US has been sticky, staying above the Fed’s target level of 2%. Investors often use gold as a hedge to inflation. So, if we continue to get support from central bank buying, and we still have some geopolitical risk, when the Fed finally eases, we could see gold higher. Also, concerns around the US and other elections in the world could cause investors to use gold to hedge the uncertainty.



OK, and for a bearish case?


What? Bearish gold? No! There are a few things that could happen which could cause gold to move down. The market believes all the central bank buying has provided a floor to the gold price, initially around $1,900, but lately around $2,000 - $2,100. If central banks no longer provide this floor because they pause or cease their purchases, we could see a correction. China recently paused their huge 18 month buying spree, and that caused a correction. But a purchase pause may be natural - they did that in 2016 and came right back into the market and there are other central banks like Turkey that are ramping up their purchases. While we are all hoping for an end to these wars, if that happens gold could lose some of its safe-haven strength. Also, the Fed could decide to put off their easing until mid-2025, which would certainly anger investors in all markets and might also dampen gold demand.

I like to think of gold as a security blanket … when things get really scary, it’s nice to have gold to hold on to. We will see how investors feel about whether or not they need that blanket …

Thank you, Kathy, very interesting. While the gold price has rallied in recent months, it does feel like there are plenty of reasons for investors to continue looking to gold to meet certain objectives.


So, thanks again Kathy for providing your insights into the gold market and thank you for joining us today to listen to our thoughts on what’s been driving the gold price over the last 15 years since we launched our gold ETC and the outlook for the months ahead.


Source: Invesco, as at 31 May 2024.

Our Invesco Physical Gold ETC

Our Invesco Physical Gold ETC provides one of the lowest overall cost exposures to the gold price in Europe. With more than US$15 billion of assets¹, it is also the largest gold product in Europe, enabling you to gain exposure to price movements without having to buy and store physical gold yourself. For investors also wishing to minimise their currency risk, we offer a currency-hedged series in GBP and EUR.

Our ETC aims to provide the performance of the LBMA Gold Price PM, less the fixed fee of 0.12% per annum. Investments are backed by physical gold bars, placed in segregated accounts, and stored securely in the London vaults of J.P. Morgan Chase Bank. Our ETC trades on multiple exchanges across Europe, is UCITS eligible and Shariah compliant. Find out more in our Gold ETC brochure.



Hi Kathy. We talked last time about the key drivers of the gold price now and over the 15 years since we launched our physical gold ETC in 2009. I wanted to look more at demand for gold exchange-traded products. What are you seeing from where you sit in the US?


The ETC response to this recent rise in gold prices was interesting – we saw outflows. I believe some of that was profit-taking for investors who have been holding gold ETCs for a very long time and looked at the macro factors that normally push gold prices higher not happening any time soon, like lower interest rates or a weakening dollar. They made their money and they took their chips off the table.

We are starting to see a shift to inflows for gold ETCs. For some of the recent down moves, we have noticed the discipline investors buying the dip if they don’t have any gold exposure or holding onto their gold if you already own these ETCs.

There are many reasons to hold gold ETCs as part of a diversified portfolio. They provide potential inflation and uncertainty hedges, diversification, and returns. And it looks like there is a lot of uncertainty ahead …


Thank you, Kathy. So now we’ve heard about the demand picture, let’s focus on how investors can gain exposure to gold. We launched our gold ETC back in 2009 to provide investors with low-cost, efficient exposure to gold. Since then, it has grown to over $15 billion in assets under management and is the largest and most cost-efficient gold exchange traded product in Europe. So, why has it been so successful?

The first thing to highlight is that the best way to gain exposure to movement in the gold price is by investing in physical gold. This may seem obvious, but some investors may feel that investing in the equity of gold miners will provide that exposure. But over the last 20 years, the return on the equity of gold miners has lagged the rally in gold as equity markets are affected by many other factors than just the change in the gold price.

The next choice is between direct physical ownership, gold futures or via an ETC backed by physical gold. While direct physical ownership will provide that direct linkage to the gold price, there may be high costs for storage and insurance in addition to transaction costs when buying and selling the physical metal. Futures will also provide returns that are similar to movements in the gold price, but they need to be rolled every couple of months to avoid taking physical delivery which can incur transaction and roll costs, and futures prices can deviate from the spot gold price.

The final option is to gain exposure via a gold ETC. In this case, investors invest in certificates that are secured against the underlying precious metal and has the advantage of the costs being low and consistent. The fixed management fee on our gold ETC is just 12 basis points while trading costs are low, with spreads usually less than 4 basis points which, combined with its operational simplicity, makes our gold ETC an efficient, low-cost way of gaining exposure to movements in the gold price.

Thank you for joining us for this interview and thank you Kathy for your insights into the demand picture for gold.

Source: Invesco, as at 31 May 2024.

  • Investment risks

    For complete information on risks, refer to the legal documents.

    Applies to Invesco Physical Gold ETC, Invesco Physical Gold EUR Hedged ETC and Invesco Physical Gold GBP Hedged ETC - Value fluctuation, Limited recourse, Commodities.

    Applies to only Invesco Physical Gold EUR Hedged ETC and Invesco Physical Gold GBP Hedged ETC - Currency hedging - ETFs.

Our commitment to responsible gold

Our commitment to responsible gold

Find out about our commitment to responsible gold and how our gold ETC adheres to the highest ethical standards.

Discover more

How to invest in gold

You can invest in our Invesco Physical Gold ETC via your usual broker or trading platform and hold it in a standard brokerage or custodial account.

Our Capital Markets teams provide a free service to help you find the most suitable and cost-effective way to buy, sell or switch products.

Email:            etftrading@invesco.com

Telephone:    +32 (0)2 641 01 25

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Gold FAQ

Exchange-Traded Commodities or “ETCs”, are investment vehicles that trade on stock exchanges and track the performance of an individual commodity or basket of commodities. With ETCs, investors can get exposure to spot commodity prices, without taking physical delivery of those commodities.

Our ETC is physically backed by gold bullion (a Gold Bar List is available on our website) which is stored securely in J.P. Morgan’s London Bank vaults. The gold is inspected twice a year by Inspectorate International Limited and includes a full bar count. Once a year they are accompanied by our auditors, PricewaterhouseCoopers.

The inspection reports and the annual audit reports are available on our website at etf.invesco.com.

Yes, it is possible to receive the metal in unallocated form if you have an LBMA clearing account. When you sell your holding, you may have the option of Physical Settlement if you do not want to take the normal Cash Settlement.

Physical delivery can be made only to a holder that is not a UCITS fund. You must specify the number and account name of an unallocated account in London with a member of the LBMA where the relevant delivery amount should be delivered. Investors that are UCITS funds are not permitted to receive physical delivery of gold. UCITS funds can only redeem for cash.

Invesco Physical Gold ETC is not a fund or an ETF, as the ETC invests in only one asset, i.e. gold, it would not meet UCITS rules on diversification that are required for a fund. The certificates are transferable securities, therefore not shares in a collective investment scheme.

For investors who wish to minimize their currency risk, we have currency-hedged share classes available in GBP and EUR.

Yes, it is possible to receive the metal in unallocated form if you have an LBMA clearing account. When you sell your holding, you may have the option of Physical Settlement if you do not want to take the normal Cash Settlement. Physical delivery can be made only to a holder that is not a UCITS fund. You must specify the number and account name of an unallocated account in London with a member of the LBMA where the relevant delivery amount should be delivered.

Investors that are UCITS funds are not permitted to receive physical delivery of gold. UCITS funds can only redeem for cash.

The LBMA is a trade association that acts as the coordinator for activities conducted on behalf of its members and other participants in the London Bullion Market.

The gold price is determined via an electronic auction that takes place twice per day in London, at 10:30 am and 3:00 pm GMT, and quoted in US dollars per fine troy ounce. The LBMA Gold Price is a fully transparent benchmark and widely accepted as the basis for pricing spot transactions.

Our Gold ETC offers direct exposure to the price of gold. Our low annual fixed fee of 0.12% allows for our ETC to have tight tracking of the spot gold price.

Invesco Physical Gold ETC seeks to minimise exposure to gold mined prior to the 2012 introduction of the LBMA’s Responsible Gold Guidance. Our holdings are currently 100%2 post-2012 gold bars and our aim is to maintain this by only accepting post-2012 gold for new creations. For more details, see our responsible gold page.

  • Footnotes

    1 Invesco, as at 31 May 2024.

    Investment risks

    Value fluctuation: The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.

    Limited recourse: If the issuer cannot pay the specified return, the precious metal will be used to repay investors. Investors will have no claim on the other assets of the Issuer.

    Commodities: Instruments providing exposure to commodities are generally considered to be high risk which means there is a greater risk of large fluctuations in the value of the instrument.

    Currency hedging – ETCs: Currency hedging between the currency in which the underlying precious metal is typically quoted and the currency of the certificates may not completely eliminate the currency fluctuations between those two currencies and may affect the performance of the certificates.

    Important information

    Data as at 31.05.2024, unless otherwise stated.  By accepting this material, you consent to communicate with us in English, unless you inform us otherwise. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

    Views and opinions are based on current market conditions and are subject to change. All investment decisions must be based only on the most up to date legal offering documents. The legal offering documents (Key Information Document (KID), Base Prospectus and financial statements) are available free of charge at our website www.invesco.eu and from the issuers.