US Global Investors' Gold ETF joins Colombia Exchange

U.S. Global Investors' Go Gold ETF (GROW) has begun trading on the Colombian Securities Exchange, according to CEO Frank Holmes. The ETF, which is recalibrated quarterly, focuses on gold mining companies with strong revenue and cash flow per share growth, with 30% of its holdings in royalty companies like Franco-Nevada, Wheaton Precious, and Royal Gold. The listing aims to provide Latin American investors access to the gold market and a USD-denominated currency hedge, particularly given that 30% of the ETF's assets are linked to Latin America.

Analysis

U.S. Global Investors (NASDAQ:GROW) has expanded the reach of its Go Gold ETF by securing a listing on the Colombian Securities Exchange, a strategic move detailed by CEO Frank Holmes. The ETF employs a "smart beta 2.0" methodology, refined over a decade of data collection and recalibrated quarterly, targeting gold mining companies with superior growth in revenue and cash flow per share, or those exhibiting the highest free cash flow yield. Notably, 30% of the ETF is concentrated in three gold royalty companies—Franco-Nevada (FNV), Wheaton Precious Metals (WPM), and Royal Gold (RGLD)—a structure Holmes asserts offers reduced downside volatility while capturing upside gains, contributing to the ETF achieving all-time highs alongside rising gold prices. Sandstorm Gold (SAND) is also a constituent.

The Colombian listing is particularly significant given that approximately 30% of the ETF's underlying assets are tied to Latin America, including Wheaton Precious Metals' royalty on the Marmato asset in Colombia, controlled by Aris Gold (ARMN). This initiative aims to facilitate access for Latin American investors, including pension funds in the Andean group (Chile, Peru, Colombia), to a U.S. dollar-denominated gold investment, thereby providing a currency hedge and leveraging the ETF's existing New York Stock Exchange listing for easier regional cross-listing.

Holmes conveyed a bullish sentiment for the gold market, citing factors such as de-dollarization efforts by nations like China—a major gold producer and buyer influencing other central banks—and the ongoing application of Modern Monetary Theory by global central banks. With gold demonstrating positive performance 84% of the time this century and prominent investors like Ray Dalio advocating for gold as a hedge against potential bond market instability, Holmes anticipates gold's role in asset allocation could expand significantly from the current low U.S. investor exposure of approximately 2%.

Key Decisions for Investors

• Investors seeking exposure to a data-driven gold mining ETF with a substantial allocation to royalty companies (FNV, WPM, RGLD) and enhanced accessibility in Latin America should evaluate U.S. Global Investors' Go Gold ETF (GROW).
• Consider the ETF’s quantitative strategy, which focuses on companies with strong revenue and cash flow per share growth and undergoes quarterly recalibration, as a potentially differentiated approach to gold equity investment.
• Factor in the supportive macroeconomic environment for gold, including central bank purchasing and its function as a hedge against currency debasement and market volatility, when assessing allocations to gold-related instruments.
• Monitor the ETF's performance relative to its stated objectives, the individual performance of its key royalty and mining holdings, and the evolving investment landscape in Latin America given the ETF's regional asset exposure.