In the face of Nigeria’s persistent foreign exchange volatility and weakening naira, gold exchange-traded funds (ETFs) have emerged as an increasingly appealing option for investors seeking stability and protection against inflation. Arnold Dublin-Green, Chief Investment Officer at Cordros Securities, recently highlighted this shift during an episode of Nairametrics’ Everyday Money Matters YouTube show, where he described gold ETFs as a “smarter and safer” investment strategy for 2025.
Dublin-Green emphasized that, given Nigeria’s current economic challenges, local investors need efficient tools to preserve value and diversify risk. He identified gold ETFs, particularly the NewGold Exchange Traded Fund, as a standout option due to their accessibility, physical gold backing, and insulation from forex-related losses.
A Hedge Against Naira Devaluation
As the naira continues to depreciate amid fluctuating oil revenues and policy uncertainty, many Nigerian investors have struggled to find reliable stores of value. Dublin-Green noted that few financial instruments available to domestic investors provide direct and efficient access to gold, making traditional approaches either too risky or logistically complex.
“There’s a growing need for Nigerians to find investment vehicles that protect their wealth, especially as the currency weakens,” he said. “Gold remains one of the most effective hedges against inflation and currency devaluation. ETFs like NewGold allow investors to tap into that protection without dealing with the complexities of physical ownership or the risks of foreign exchange fluctuations.”
He explained that the NewGold ETF, which is denominated in naira and tracks the real-time price of physical gold, allows investors to bypass the forex market entirely. By offering small, affordable units backed by actual bullion reserves, the ETF democratizes access to gold, enabling more Nigerians to protect their savings without needing large capital or offshore brokerage accounts.
Portfolio Diversification: A Strategic Necessity
In addition to highlighting gold’s defensive qualities, Dublin-Green advised investors to diversify their portfolios to mitigate systemic risks. He stressed that a diversified portfolio—composed of money market instruments, dividend-yielding equities, and hard assets like gold—offers the best protection against economic turbulence and currency depreciation.
“Many Nigerian investors are reactive rather than proactive,” he said. “They panic when the naira suddenly drops but ignore the slow and steady erosion of their purchasing power over time. This passive approach is what leaves so many people vulnerable.”
He pointed to the correlation between Nigeria’s oil dependency and its currency fluctuations, emphasizing that the naira’s performance tends to mirror global oil prices. “Like many oil-producing nations, our currency’s strength is tied to oil. So when oil prices decline, so does the naira. This means Nigerians need to think ahead and build portfolios that don’t crumble every time oil prices dip.”
His advice to investors was simple but strategic: “Diversify. Hold money market instruments. Pick high-quality, dividend-paying equities. Add some gold. Build a portfolio designed to survive economic shocks.”
Comparing Physical Gold, XAU/USD, and NewGold ETF
In 2025, the global gold market has delivered robust returns, driven by a mix of geopolitical tensions, economic uncertainty, and a weakening U.S. dollar. Gold (XAU/USD) began the year on a strong note, breaking through the $2,800 resistance level in January and climbing steadily through March and April. By May 6, it had reached a peak of over $3,400 per ounce—its highest ever—before pulling back slightly to stabilize above $3,200 by mid-May.
Despite the recent dip in spot gold prices, the NewGold ETF has shown even stronger performance in naira terms. As of May 16, 2025, the ETF has surged by 40.5% year-to-date, rising from N29,002 at the start of the year to N59,000. This significant gain has outpaced the global gold rally, largely due to the naira’s ongoing devaluation and the ETF’s domestic pricing structure.
Dublin-Green noted that the NewGold ETF’s performance has provided Nigerian investors with a rare opportunity to benefit from both rising gold prices and a weakening local currency. Unlike spot gold (XAU/USD), which requires dollar-denominated transactions and forex access, the ETF allows Nigerians to invest entirely within the local financial system.
“Investing in physical gold or international gold products like XAU/USD exposes Nigerians to exchange rate risks, especially if you don’t have dollars,” he said. “But with the NewGold ETF, you invest in naira, you earn in naira, and your returns reflect the global gold market. It’s a win-win situation.”
The Benefits of Physical Gold-Backed ETFs
Unlike derivative-based gold investments, the NewGold ETF is backed by actual bullion reserves, offering a tangible and secure foundation for investors. Dublin-Green highlighted this physical backing as a critical advantage for long-term, passive investors who want both safety and reliability.
He added that gold-backed ETFs remove many of the traditional barriers to gold investing—such as storage concerns, insurance costs, and liquidity issues—while still delivering exposure to the metal’s market value. Because the ETF is listed and traded on the Nigerian Stock Exchange, investors can buy and sell units as easily as shares, making it one of the most convenient vehicles for accessing the gold market.
A Cautious But Optimistic Outlook
Looking ahead, Dublin-Green believes the demand for gold ETFs will continue to rise, especially if the naira remains under pressure and global uncertainties persist. He advised investors not to wait for economic conditions to worsen before taking protective steps.
“The time to act is now,” he stressed. “If we’ve learned anything over the past few years—from COVID to inflation to currency devaluation—it’s that waiting until it’s too late can cost you dearly. Nigerians need to start thinking strategically about their wealth.”
He concluded by encouraging greater awareness around gold ETFs and investment literacy in general. “This isn’t just about gold,” he said. “It’s about financial security, smart planning, and understanding how to use the tools available to us. We need to spread this knowledge to empower more people to take control of their financial futures.”
Final Thoughts
In a rapidly changing economic landscape marked by inflation, currency instability, and global market uncertainty, Nigerian investors face growing challenges in preserving the value of their assets. Gold ETFs like the NewGold Exchange Traded Fund provide an accessible, reliable, and inflation-resistant investment option that meets these challenges head-on.
With returns already outpacing physical gold in 2025, and strong institutional backing, gold-backed ETFs are quickly becoming a cornerstone of smart investment strategy in Nigeria. For investors wary of a declining naira and looking for stable, long-term growth, the message from experts is clear: diversify, and let gold be part of your portfolio.
