Sprott Gold Miners ETF

SGDM

Market cap $655M

Ceasefire optimism, a weaker dollar and cooling oil prices are putting gold ETFs back in focus.

In a Sprott Precious Metals report, Sprott Managing Partner and Market Strategist Paul Wong, noted gold reclaiming its status as the world's primary neutral reserve asset. When it comes to the global central banking system, gold reserves have overtaken U.S. dollar-denominated reserves.

Gold's run has forced investors to pick a lane. Sprott Gold Miners ETF (NASDAQ:SGDM) and NEOS Gold High Income ETF (NASDAQ:IAUI) both let you express a bullish gold view, but they sit at opposite ends of the risk spectrum.

As gold prices are facing short-term volatility, its associated mining sector is undergoing a structural transformation characterized by a resurgence in strategic dealmaking.

While gold has proved to be a hot commodity for the last few months, some naysayers have looked at March's short-term volatility as a reason to stay away from the precious metal for now.

SLV and SGDM charge identical expense ratios, but SGDM adds equity market exposure via gold miners instead of direct silver. SLV delivered a much stronger 1-year return, while SGDM experienced a slightly deeper drawdown over five years.

In recent months, there has been a lot of discussion about the importance of amplifying the domestic production and supply chains for rare earths in the United States. Given that China maintains a significant hold over the global market, the U.S. looking to increase its own rare earths presence makes a good deal of sense.

Geopolitical conflict is forcing the markets to think critically about critical minerals. More specifically, the importance of critical materials has shifted from industrial use to a vital component in national defense and energy security.

Since the start of Operation Epic Fury at the end of February, Brent crude oil prices have risen as high as $150 a barrel as the Strait of Hormuz has been effectively closed by Iran.  Panic over supply is driving energy prices higher, and consumers are experiencing it at the pump with soaring gasoline prices.

SGDM has dramatically outperformed IAU over the past year, but with a higher expense ratio and more volatility. IAU offers much larger assets under management, lower transaction costs, and a pure play on the price of gold.