With Nigeria’s foreign exchange volatility and ongoing naira devaluation, Gold Exchange Traded Funds (ETFs) like the NewGold ETF could be a safer, smarter choice for Nigerian investors in 2025 than investing directly in XAU/USD (spot gold). This is the key insight shared by Arnold Dublin-Green, Chief Investment Officer at Cordros Securities, during an episode of Everyday Money Matters on Nairametrics’ YouTube channel.
Why Gold ETFs Are Better for Nigerian Investors in 2025
Dublin-Green emphasised that Nigerian investors face unique challenges when it comes to hedging against inflation and currency risk, making the NewGold ETF, priced in naira, a more practical alternative to traditional gold investing.
“The companies behind these ETFs price them in line with the value of physical gold,” said Dublin-Green. “They’re structured in affordable units, making them accessible and appealing to the average Nigerian investor.”
Unlike XAU/USD, which is influenced by exchange rate fluctuations and is typically traded in U.S. dollars, the NewGold ETF allows Nigerian investors to gain exposure to gold’s performance without worrying about naira depreciation eroding their returns.
Gold Performance in 2025: XAU/USD vs. NewGold ETF
Gold has seen impressive gains in 2025:
- Spot gold (XAU/USD) gained 23.5% year-to-date, reaching over $3,200/oz as of May 16, 2025.
- Gold peaked at $3,400/oz on May 6 before retreating slightly.
- NewGold ETF, however, outperformed spot gold with a 40.5% YTD return.
- It surged from ₦29,002 at the start of the year to ₦59,000 as of May 16, 2025.
This performance highlights the advantage of investing in a naira-based gold ETF, which not only tracks the international gold price but also shields investors from the weakening local currency.
Portfolio Diversification: A Must in a Volatile Economy
Dublin-Green also advocated for portfolio diversification to help Nigerians build resilience against economic shocks, inflation, and FX volatility:
“Investors must find ways to diversify their exposure to currency risk,” he noted. “A declining naira—especially during oil price dips—can dramatically reduce asset value.”
He advised investors to
- Invest in short-term money market instruments
- Buy dividend-paying stocks
- Add inflation-resistant assets like gold
- Prioritize stable investments for long-term protection
Naira’s Link to Oil Prices: The Hidden Risk
Describing the naira as an “oil story,” Dublin-Green explained that, like many OPEC-linked currencies, the naira weakens when global oil prices fall, making it essential for Nigerians to hold currency-hedged assets.
Why NewGold ETF is a Better Gold Investment for Nigerians
In 2025, while gold remains a strong hedge against global economic uncertainty, Nigerian investors may be better off choosing gold ETFs over direct XAU/USD investments. With its impressive returns and naira-based pricing, the NewGold ETF offers accessibility, inflation protection, and lower currency risk, making it the smart gold investment for Nigerian portfolios.
Reference
Nairametrics
