Finance
Gold is safer than mining stocks: State Street’s Milling-Stanley
Investors looking to weather a volatile market may want to opt for physical gold over gold stocks.
That’s according to George Milling-Stanley, one of the world’s experts in gold and the chief gold strategist at State Street Global Advisors.
“One of the reasons I own gold bar(s) is that I believe it offers me some protection against potential weakness in the equity market,” Milling-Stanley told CNBC’s “ETF Edge” this week. “When the equity market goes down, gold mining stocks remember that they’re equities, and they tend to go down with the general level of the equity market. So, they’re not offering me that extra level of protection.”
Milling-Stanley’s firm runs two exchange-traded funds that track the performance of the spot price of gold: the SPDR Gold Shares ETF (GLD) and SPDR Gold MiniShares Trust (GLDM).
They’re differentiated by their gross expense ratios — 0.40% for GLD and 0.10% for GLDM — and it’s this key distinction that also differentiates the type of investor they attract, according to Milling-Stanley.
“If you are someone who wants to trade … or if you want to be a tactical player — that means you need to be able to move very, very quickly — then GLD’s liquidity after 20 years now means that that has very, very low trading costs compared to any other gold ETF,” he said. “If you have a million dollars and you want to put a million dollars into gold and leave it out there, then GLDM with its lower expense ratio makes more sense for you.”
As of Thursday’s close, GLD and GLDM were both up 15% year to date.
Bullion, bitcoin and boomers
The notion that gold is a “fuddy-duddy” investment no longer rings true, according to Milling-Stanley. State Street’s 2023 Gold ETF Impact Study found that millennials had greater portions of their portfolios allocated in gold than older generations.
The metal’s popularity among younger investors comes as bitcoin continues to attract assets from both millennials and Generation Z. A Policygenius survey published this week found that millennials were more likely to own bitcoin than any other generation, and Gen Z was more likely to own bitcoin than stocks, bonds or real estate.
But Milling-Stanley pushed back on the idea that gold and bitcoin are competing for assets across the board.
“Bitcoin may well be some competition for the people who want to take a tactical position in gold and just wait for the price to go up and sell. I think that bitcoin may well offer competition there,” he said. “But I don’t think that bitcoin really competes in terms of a long-term strategic allocation, and that’s where I think gold really comes into its own.”
Yoni Assia, Co-Founder and CEO of eToro, speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 2, 2023.
Patrick T. Fallon | Afp | Getty Images
In eToro‘s IPO filing, ahead of the company’s market debut on Wednesday, the stock trading platform spent over 1,500 words spelling out the potential risks of operating in Israel, home to corporate headquarters.
While the current military conflict between Israel and Hamas hasn’t “materially impacted” business, “the continuation of the war and any escalation or expansion of the war could have a negative impact on both global and regional conditions and may adversely affect our business, financial condition, and results of operations,” eToro wrote in a section of the filing titled “Risks related to our operations in Israel.”
The company, which lets users trade stocks, commodities and cryptocurrencies, was founded in 2007 by brothers Yoni and Ronen Assia and David Ring, and is based in Bnei Brak, near Tel Aviv.
In its prospectus, eToro referenced the attacks of Oct. 7, 2023, by Palestinian Islamist group Hamas on Israel. In the year and a half since then, the two sides have mostly been at war in the Gaza Strip, where tens of thousands of Palestinians have been killed and much of the area has been made uninhabitable.
Tensions have also escalated with other designated militant groups in the region, including Hezbollah in Lebanon and the Houthis in Yemen.
“It is possible that these hostilities will escalate in the future into a greater regional conflict, and that additional terrorist organizations and, possibly, countries, will actively join the hostilities,” eToro wrote, adding that the magnitude of the conflict is “difficult to predict.”
Yoni Assia, eToro’s CEO, told CNBC in an interview that the company’s business is global, with operations worldwide. Regarding the challenges of being in Israel, Yoni Assia said “everything is in the risk factors.”
“We do hope to see more peaceful times,” he said. “It’s better for everyone and for our employees from a business point of view.”
EToro, which competes with Robinhood, had its Nasdaq debut on Wednesday. The stock popped 29% a day after eToro priced shares above the expected range. At the close of trading, the company was valued at about $5.4 billion.
EToro’s IPO comes as several tech companies get set to test the public markets following an extended drought dating back to the soaring inflation of 2022.
After the attacks of Oct.7, thousands of Israelis were called up for extended active reserve duty that caused some disruption to the country’s flourishing tech community. Ongoing obligations could “impact our competitive position and cause our sales to decrease,” eToro wrote.
Israel has also faced some backlash for its military campaign in Gaza.
The eToro filing cited International Criminal Court warrants for the arrests of Prime Minister Benjamin Netanyahu and his former minister of defense, and calls for boycotts from activist groups as potential roadblocks for the business.
The country has also been hit with credit downgrades from Fitch, Moody’s and S&P Global that could harm eToro’s operations, the filing said.
Etoro said that intensified cyberattacks since 2023, and potential damages from armed attacks, could raise costs or incapacitate its workforce due to safety concerns.
The company also highlighted tax law differences between the U.S. and Israel and the location of its executives as a potential risk factor.
“It may be difficult to enforce a U.S. judgment against us, our officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors,” eToro wrote.
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