Investors flock to gold ETPs on interactive investor - here's why

The yellow metal's surge has tempted ii customers to flock to Gold ETPs. We name the top ones here.

The price of Gold soared to a record high of $2,000 yesterday as continued uncertainty over the Covid-19 pandemic and the prospect of a second wave of the outbreak continues to weigh on investors’ minds.

Customers of interactive investor, the UK’s second largest direct to consumer investment platform, have flocked to Gold exchange traded products (ETPs) over the past few days since the beginning of August. 

They account for three of the top 10 bestselling ETPs so far this month, with iShares Physical Gold ETC (LSE:SGLN) ranking highest in second position, WisdomTree Physical Gold (LSE:PHGP) in fourth and iShares Gold Producers ETF (LSE:SPGP) in tenth. 

Two gold ETPs made the top 10 cut in July: iShares Physical Gold (LSE:IGLN) and WisdomTree Physical Gold (LSE:PHAU) ranking second and fifth positions respectively.

Richard Hunter,Head of Markets, interactive investor, says: “Gold remains on a tear, hitting new record highs and currently up by 34% in the year to date.

“The latest surge is tied to the inverse relationship between gold and the US dollar, where recent weakness in the currency has been driven by pandemic-related concerns.

“In particular, the spike in Covid-19 cases in certain states has threatened to derail the economic recovery, while the government seems unable to agree a way forward on providing any further fiscal stimulus to the beleaguered US citizen.

“Gold’s status as a haven asset is also in renewed focus, with some unease over whether markets have come too far too fast, deteriorating relations between the US and China and a potential second wave of the pandemic outside of the US giving investors some cause for concern.”

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “Gold’s reputation as a haven asset has come to the fore during the coronavirus pandemic. Economic stimulus to combat the economic disruption of coronavirus has exacerbated paltry savings rates and a fall in government bond yields, making gold more attractive. But while gold has outperformed in recent history, the precious metal can have big short-term swings in value and is sensitive to anything from the US dollar, Sterling fluctuations, through to wedding seasons. 

“Gold remains a good portfolio diversifier and one of the easiest and cheapest ways to invest in the asset is through an exchange traded commodity (ETC) that tracks the price of gold. We like the iShares Physical Gold ETC. Unlike many commodity funds, this one buys gold bullion instead of gaining exposure to the metal by buying derivatives (financial contracts that are derived from the asset but have no direct value in and of themselves). With low ongoing charges of 0.15%, it is an easy, flexible and cheap way to invest in the asset and on our Super 60 list.”