By Ambrose O’Callaghan
The spot price of gold rose over 25% in 2024. That represented the strongest year for the yellow metal since 2010. The historical safe haven managed to outperform most commodities, global equities, and bonds through 2024. A chaotic start to 2025, spurred on by an aggressive US trade policy that has been liberal in its use of tariffs, has led to more gains for gold. Today, we’ll look at where the yellow metal is heading and break down a top gold ETF that focuses on Canada’s most accomplished miners.
The 2020s: A golden age?
In the first quarter of 2025 gold managed a nearly 20% increase. This is a very impressive performance, historically speaking, which the yellow metal has rarely matched even on its biggest days. Gold has outperformed nearly every major equity index on a year-to-date basis as at the end of March 2025. If gold can continue its momentum into 2025, it could potentially deliver an astonishing annualized gain north of 90%. This is a remarkable performance for an asset often dismissed as an insurance hedge.
Gold: Benefits in a portfolio
I Inflation Hedge
Over its history, gold has demonstrated the ability to preserve its purchasing power as the value of fiat currencies fluctuate in the global market. During historical periods of high inflation, like the 1970s, gold has been a top performer. Meanwhile, other assets during inflationary periods, like equities, see their performance lag.
II Portfolio Diversification
Gold is effective as a portfolio hedge due to its low or often negative correlation with traditional asset classes like stocks and bonds. This negative correlation is often even more pronounced during periods of market turbulence. Adding gold to a portfolio has been shown to improve risk-adjusted returns. It can also bolster a portfolio’s downside protection with demand for safe assets increasing in a period of market stress.
III Central Bank Demand
Central banks around the world have continued to accumulate gold at a high rate in the first quarter of 2025. Indeed, the yellow metal has maintained a strong demand trend among central banks since the tumultuous year of 2022. Data from January-February 2025 showed net purchases of 44 tonnes in the United States. Key drivers for central bank demand include shifting monetary policy. Central banks in some emerging markets are increasing gold to reduce reliance on the US dollar, while also hedging against currency and economic risks.
IV Geopolitical Risk
Gold is renowned for its history as a crisis hedge. The yellow metal is devoid of credit risk as well as its aforementioned-negative correlation to risk assets. Geopolitical tensions have had a major impact on the price of gold in the past. The Russian invasion of Ukraine in 2022 saw investors flock to the safe haven, kickstarting upward momentum which has had impressive staying power.
V Supply Demand Fundamentals
Global supply constraints and robust demand have created favourable conditions for gold. The total gold supply increased 1% from 2023 to 2024 as mine supply and recycling led to growth. Meanwhile, gold demand also rose 1% year-over-year even as annual consumption of gold jewellery fell 11% with added pressure on consumers. Regardless, gold bar and coin investment remained steady.
HGGG | A top performing Canadian gold ETF
The Harvest Global Gold Giants Index ETF (HGGG:TSX) is designed to give investors gold exposure through profitable large-scale gold miners. This strategy is meant to minimize the impact of fluctuating gold prices for a portfolio, especially to the downside. To that end, HGGG holds the top 20 dominant, large capitalization global gold companies. That includes Canadian gold giants like Alamos Gold, Kinross Gold, and Agnico Eagle Mines.
Predictably, HGGG has been a big beneficiary of gold’s remarkable bull run in 2024 and 2025. See the annualized performance chart below.
Annual Performance
As at May 31, 2025
| Ticker | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 4Y | 5Y | 6Y | SI |
|---|---|---|---|---|---|---|---|---|---|---|---|
| HGGG | 7.01 | 27.58 | 38.40 | 46.91 | 65.26 | 34.59 | 25.10 | 13.11 | 9.15 | 16.87 | 15.77 |
Not only has HGGG delivered a strong performance in its own right, compared to the spot price of the yellow metal. It has managed to outperform many of the top gold ETFs in this space. This advantage should keep investor eyes on this gold ETF as the bull run charges on.
Disclaimer
Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). Please read the relevant prospectus before investing. The indicated rates of return are the historical annual compounded total returns (except for figures of one year or less, which are simple total returns) including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. The funds are not guaranteed, their values change frequently and past performance may not be repeated. Tax investment and all other decisions should be made with guidance from a qualified professional.
Certain statements in this communication are forward looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS.FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS. Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether as a result of new information, future events or otherwise.
