Gold is one of the few bright spots in this market.
The precious metal surged to six-year highs on Monday as U.S. stocks plummeted in their worst trading day of 2019 on escalating worries around the U.S.-China trade war and its impact on domestic and global economies.
Gold-based exchange traded funds, including the SPDR Gold Shares ETF and the VanEck Vectors Gold Miners ETF, also outperformed. The VanEck fund, which tracks gold-mining stocks under the ticker GDX, reached its highest level in nearly three years on Monday, while the SPDR fund, ticker GLD, set a 52-week high.
"By the amount of gold in the vault, ETFs are at about 80% below [the] all-time highs" from 2012, Dave Nadig, managing director of ETF.com, said Monday on CNBC's "ETF Edge." "All we've got is demand from folks who are looking for safe-haven assets on days like today."
But investors should take a hard look at their options in the gold market before blindly diving into one of these ETFs, Nadig said.
"Do you want to be owning the companies that are effectively digging this stuff out of the ground, with all of the single-stock risk, management risk, potential for labor problems, etc., or do you just want to own the metal?" he asked, adding that there are "pros and cons to both."
Gold-mining ETFs like the VanEck fund, for one, have had a turbulent several years as the underlying companies dealt with extraneous issues on top of the fluctuating price of gold, whereas "gold is gold. It just is what it is," Nadig said.
For Kevin O'Leary, chairman of O'Shares Investments and an investor on "Shark Tank," one of those options was decidedly off the table.
"I never touch gold [mining] stocks because you're letting a layer of idiot management between you and the price of the commodity," O'Leary said in the same "ETF Edge" interview. "The history of managers of gold companies is abysmal. I'm just telling the truth. ... They cannot control [the] cost of extraction. Why touch that? It's full of volatility and bad management."
But if you're going for gold, it's hard to see where that could go wrong right now, Nadig said.
"If you're a global investor and your opportunity is either buy gold in some form or go buy the bund at a negative yield, gold looks a whole lot more interesting, honestly," he said. "So, I think gold's status as a safe-haven asset has only gotten stronger in a declining-rate environment."
