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Is it Worth Owning This Gold ETF in 2022?

·1 min read

Gold prices have been hit hard by rising interest rates and a strengthening U.S. dollar in recent months. Central banks are working hard to combat soaring inflation rates, but their hard work has yet to deliver a break for overburdened consumers. Can gold stage a comeback in this hostile environment?

On the other hand, gold bulls have reason to believe in a rebound as the risk of a recession is rising. A recession will put central banks in a bind that could see them reverse course when it comes to the rate tightening path.

The iShares S&P Global Gold ETF (TSX:XGD) offers investors exposure to global securities of producers of gold. Shares of this ETF have dropped 19% in 2022 as of close on July 26. It is down 22% in the year-over-year period.

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Investors will be forced to eat a moderate MER of 0.61% if they choose to snatch up this ETF. Some of the top holdings in this fund include Newmont, Barrick Gold, Franco Nevada, and Agnico Eagle Mines. These gold miners have seen their stock prices hammered in recent months. This is considered a high-risk fund due to the volatile nature of gold miners.

The chances of a moderate-to-severe recession have climbed in the face of economic uncertainty. Investors looking to make a high-risk high-reward play may want to snatch up this gold ETF in late July.