In a recent segment of The Claman Countdown, Sean O’Hara, President of Pacer ETFs, elaborated on the growing popularity of exchange-traded funds (ETFs) and highlighted his preferred investment choices in the current market landscape. As gold continues its impressive ascent, reaching an all-time high of $3,880.8 an ounce, market analysts are predicting that a new milestone of over $4,000 per ounce could be realized by late 2025 or early 2026.
Aakash Doshi, head of gold strategy at State Street Investment Management, noted in a client report that there is a strong likelihood—estimated at 75%—that gold prices will surpass this significant threshold. This optimism is underpinned by the current environment characterized by fear of missing out (FOMO), which has been influencing investment decisions.
Gold’s recent rally marks its seventh consecutive week of growth, contributing to an impressive yearly gain exceeding 47%. Factors such as uncertainty surrounding a potential government shutdown, a weakening U.S. dollar, and anticipated cuts in interest rates are all contributing to this upward momentum. The Federal Reserve is expected to initiate rate cuts in both October and December, according to the CME’s FedWatch Tool.
As interest rates decline, gold may experience heightened support through two notable channels, according to Doshi: the reduced opportunity cost of holding gold—given its status as a non-yielding asset—and a possible steepening of the U.S. Treasury curve, which generally trends negatively for the dollar. The U.S. dollar has been losing ground against many of its primary trading partners, possibly on track for its most significant annual decline since the 1970s.
Bullion exchange-traded funds have seen substantial inflows globally, marking the highest levels since 2020. Doshi pointed out that while total physical gold holdings remain below their pandemic-era peaks, there is still considerable potential for increased buying activity. He emphasized that inflows into bullion ETFs play a crucial role in tightening supply and demand dynamics, which significantly contributes to driving gold prices to record highs this year.
The SPDR Gold Trust, operated by State Street, has emerged as the largest ETF backed by physical gold, demonstrating consistent weekly inflows since mid-September. Among the top-performing ETFs, the PowerShares DB Gold Double Long ETN and ProShares Ultra Gold have each seen remarkable gains of over 90% this year, while the Sprott Physical Gold Trust and Franklin Responsibly Sourced Gold ETF have surged by 47%, according to data from VettaFi.
This burgeoning interest amidst rising prices highlights a trend where wealthy investors are increasingly turning to ETFs as a strategic vehicle for entering lucrative assets, further solidifying gold’s status as a safe-haven investment in uncertain economic times.
