Last Updated on 2021-09-30
Inflation – has been discussed a lot recently during the COVID-19 pandemic due to the lockdown and caused plenty of job losses. Especially in the US, people are losing their income and Americans are known as the “low savings rate” group of people. They are living on the paychecks month to month and are very vulnerable if they lose their income for a couple of months. Thus, the US government prints huge amounts of money to give away and help people get through the tough time.
That causes inflation and imitation all over the world since the US is the superpower on the planet.
What is AAAU – Goldman Sachs Physical Gold ETF
This brings us a question. What should I do to prevent my money from getting thinner and thinner? Buying physical gold might be one of many options. That’s what Goldman Sachs Physical Gold ETF ( AAAU: NYSE Arca ) has to offer.
AAAU tracks the gold spot price, less expenses and liabilities, using gold bars held in a vault in Perth, Australia. Investors can redeem their shares for gold coins and small bars.
https://www.etf.com/
AAAU is backed by pure gold which provides an option for investors who want to redeem for physical gold. I believe this option gives investors more confidence and willingness to buy AAAU ETF. Although it has a large minimum fee to withdraw gold from your own account. So, it’s impractical to do so when you only want to take a small amount of it out.
Basic Information :
Asset Class : Commodities
Fund Inception Date : 2018.07.26
Since Inception NAV Performance as of 2021.08.31 : 13.20%
Expense Ratio : 0.18%
Assets Under Management : $385.65M
Distributor : ALPS Distributors, Inc.
ETF Type : Passive
Custodian : JPMorgan Chase Bank, N.A.
Trustee : Bank of New York Mellon
Sponsor : Goldman Sachs Asset Management, L.P.
Currency : US Dollar
Replication : Physical
Vault Location : London, UK
Fund Structure : Grantor Trust
GSAM(Goldman Sachs Asset Management) acquired this fund on December 14, 2020 from Cottonwood ETF Holdings and changed the fund name from Perth Mint Physical Gold ETF to Goldman Sachs Physical Gold ETF.
News Link : Goldman Sachs completes acquisition of physical gold ETF
Pros And Cons
Incan Empire worships God with gold in Machu Picchu. Humankind loves gold since ancient times. Gold has always been the best and only tool to defend Inflation before alternative – decentralized cryptocurrencies emerged such as BTC, ETH, and even Dogecoin come up. But I wouldn’t say it’s a good idea to invest more than 3% of my total assets in cryptocurrency due to my personal asset allocation strategy.
News Link : As Bitcoin soars to near $50,000, Elon Musk’s profit jumps by 250%
Pros
It has value in industrial uses such as Semiconductors, ceramic IC chips as well as people’s daily decoration like diamond rings, necklaces.. etc. It is widely used in our society. No matter how the world changes, gold would still be THE most essential metal element in our life.
In history, the classical gold standard did happen from 1880 to 1914. The Gold Standard Act of the United States was passed in 1900 and established gold as the only standard for redeeming paper money, stopping bimetallism. It was signed by President William McKinley. Back at that time, you could get the fixed price of gold at $20.67 per ounce until 1933. It states the truth that the United States once have enough amount of gold for supporting its own country’s currency.
The concept of gold equals wealth is buried so deep in people’s minds, especially in Southeast Asia like Vietnam where workers lining up to purchase gold after getting their wages, it makes gold the famous tool against inflation.
Cons
It doesn’t have a quarterly dividends payout.
It doesn’t have a Board of Directors, A management team, and CEO work day and night to strive for the biggest Stockholders’ equity.
It doesn’t have consecutive dividends payout for over 25 years such as KO, JNJ, MCD, and MMM.
All that means is simply the Passive Commodity ETF. It won’t rise dramatically like TSLA in the year 2020.
Key Takeaways
⭐️It would be nice to have some proportion of Commodity ETF in your asset allocation strategy.
⭐️Gold is the common tool to defend your asset against inflation.
⭐️AAAU is not your engine to grow your portfolio.
⭐️AAAU is a steady and valuable asset in your investment when the government starts printing money out of thin air.
