Investors using futures for gold exposure may be overpaying: Invesco

Investors using futures for gold exposure may be overpaying: Invesco

DUBAI — A recent analysis by Invesco shows that investors that have opted to gain exposure to gold through futures may have paid significantly more in terms of costs in 2020 versus those that have used Exchange Traded Commodity (ETCs) products.The February '21 gold future, which will soon be the next active contract, has been trading at about $10 per ounce premium (51bps) versus spot gold. According to Invesco's analysis, while not as expensive as previous rolls this year, this still equates to a substantial cost to investors as the expiring contract (December ‘20) is trading very close to spot prices.Jim Goldie, EMEA head of Capital Markets, ETFs and Indexed Strategies at Invesco, said: “This suggests that investors accessing gold exposure versus futures in 2020 may have endured aggregated roll costs of 600bps or more, since the coronavirus pandemic disrupted gold futures markets. This compares with obtaining exposure to physical gold via ETCs, which can be as low as 15bps holding cost per year.”Invesco