Gold prices have historically surged during market upheavals in the last half-century

The precious metal remains a top pick for investors as they navigate an uncertain macroeconomic backdrop

Gold prices have historically surged during market upheavals in the last half-century. The precious metal remains a top pick for investors as they navigate an uncertain macroeconomic backdrop fueled by high US tariffs, an escalating trade war with China, and dynamic changes within the federal government.

Gold prices soared to a record high of £2,460 ($3,245) per ounce last week amid the ongoing market turmoil. The time-tested tangible asset is positioned for further growth this year as economists forecast higher inflation, rising consumer prices, global supply chain disruptions, stock market volatility, and increasing chances of a US recession for the remainder of 2025. The latest stock market crash wiped out trillions of dollars from investor accounts as major US benchmark indexes declined to correction territory.

Investors are flocking to gold to offset the losses arising from stock investments during market volatility. The precious metal also protects investment portfolios from the effects of inflation and instability in fiat currencies.

Several factors, like gold's limited supply, portability, exchangeability, universal demand, and negative correlation to stock markets, continue to lift its prices.

According to an NYU Stern estimate, a £75.82 ($100) investment in gold in 1928 would be worth £9,590 ($12,649) in January 2025—more than a 12,000% value appreciation.

This incredible performance is a testament to gold's enduring value and ability to outpace inflation and market turbulence over the long term.

Accessibility to gold has markedly improved over the years, and the best way to buy it mainly depends on investor preferences.

Investors can buy physical gold in bar or coin form from a precious metals dealer. However, this investment option comes with hassles related to storage, safety, transaction fees, custodian and insurance costs.

You can avoid these costs and concerns by purchasing units of a gold exchange-traded fund (ETF) via a brokerage account since these investment instruments track the movements of gold prices, offer high liquidity, and charge low fees.

Many investors also purchase gold mining stocks for indirect exposure to the precious metal. While the growing demand for gold means more mining requirements, the stock prices of mining companies are more impacted by environmental metrics and financial performance instead of the gold prices.

Furthermore, many gold mines and mining businesses are located near politically active regions and face regulatory challenges, adding to the uncertainty over share price movements.

However, closed-end trust funds like the Sprott Physical Gold Trust allow investors to buy real gold stored in secure vaults. The most unique feature of this fund is that you can gain exposure to gold by purchasing units of the fund, which can be redeemed for equivalent physical gold if need be during an extreme market crisis. This feature is rarely available with gold ETFs.

Moreover, the Sprott Physical Gold fund eliminates operational and management risks, handling and storage issues, and any volatility caused by external factors like regulatory hurdles.

The fund's units are listed and traded on the Toronto Stock Exchange (TSX) and can be bought and sold like any other stock. These units are fully backed by physical gold, which is stored in secure, segregated vaults in Canada and London.

The fund pays no interest or dividends and has a low annual management fee of 0.37%. It is also fully covered by an A-rated RBG.

The Sprott Physical Gold Trust is an ideal investment vehicle for investors who want to own physical gold with minimal hassle and at a low cost. It is also a good option for investors who are concerned about the risks of investing in gold mining stocks or other types of gold derivatives.

In an interview with Benzinga, Eric Sprott, chairman and CEO of Sprott, highlighted the unique features of the Sprott Physical Gold Trust and explained why it is a preferred choice for investors seeking direct exposure to the precious metal.

Sprott stated that the trust's units are essentially "IOUs" for the gold, allowing investors to buy units of the fund, which are listed and traded on the TSX. These units can be redeemed for the underlying physical gold if needed, especially during an emergency or extreme market condition.

This feature is not typically available with gold ETFs, which are also subject to operational and management risks, handling and storage issues, and potential volatility caused by external factors like regulatory hurdles.

In contrast, the Sprott Physical Gold Trust is a closed-end trust fund that holds only physical gold, eliminating any operational or management risks and ensuring a stable and predictable investment vehicle.

The fund's units are bought and sold like any other stock, and it pays no interest or dividends, although it has a low annual management fee of 0.37%.