Tag Archives: IAU

Gold ETFs Fuel Selling as Prices Try to Hold $1,400

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Physically-backed gold exchange traded funds are used by investors as an easy alternative to buy the metal within the equities markets. However, the innovation in ETFs can also add to the selling pressure on gold.

“The ETF revolution set expectations very high and brought a lot of liquidity at first” to the commodity markets, said Kevin Kerr, president and chief executive officer of Kerr Trading International. “After all, the ETFs were much more palatable to the average equity investor who wanted to steer clear of futures or physical gold and silver.”

Gold ETFs that hold the physical metal were credited for taking the commodity market to record highs over the past five years, reports Myra P.Saefong for MarketWatch. Gold prices recently dipped to the lowest levels seen in two weeks, at $1,421 per ounce, leading shares of the largest gold exchange traded fund SPDR Gold Trust (NYSEArca: GLD) down 2%. [Gold ETF Outflows Persist After Fed]

To date, gold futures are down 15%, with April witnessing an 8% drop. Large banks have lowered gold forecasts, which led to an outpouring of assets in gold ETFs, in addition to prior losses in gold ETF outflows earlier in the year. [Gold ETFs Contribute to Bullion Price Slide]

The outflows in gold ETFs have left some investors burned. The easy access that gold ETFs awarded the average retail investor was a huge advantage, however, the losses recently incurred are indicative of how much harm can be done when individual investors put capital into asset classes not intended for the masses or the inexperienced. [Gold ETF Asset Flows are a New Market Indicator]

“Investors are disenchanted with the commodity ETFs and the great promise they held when they were launched,” said Kerr. “Damage has been done by the ETFs as they have dissuaded many investors from the resource space due to losses.”

The iShares Gold Trust (NYSEArca: IAU), the second-largest gold backed ETF, has suffered a loss of $766.4 million in April alone, compared to GLD that lost $6.77 billion in the month of April.

SPDR Gold Trust

Source: http://www.etftrends.com/2013/05/gold-etfs-fuel-selling-as-prices-try-to-hold-1400/

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Gold’s Double Whammy Is In Play

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The common reasoning behind investing in gold is centered on inflation fears, although that has been proven to be a myth, and I wrote the article “Gold: Deflation, Stagflation, High Inflation, It Doesn‘t Matter!” on July 31, 2011 that indicated how the World Gold Council, the ultimate authority on gold, was making a hard sell from every angle. After all, the organization’s magnificent marketing campaign that started in November of 2004 with the introduction of the SPDR Gold ETF (GLD) created demand beyond the commercial realm, and was the true wind beneath gold‘s wings. The other major ETF, iShares Gold Trust (IAU), was introduced in January of 2005. Between 2003 and 2012, investment demand grew into a 45% segment from a meager 10%, while reducing the jewelry and technology segment to 55% from 90%. In addition, combined demand from jewelry and technology declined 18.6% — from 2,870 tons 2,336 tons — during the same period, while ETFs, bars and coins rose from 304 tons to 1,535 tons, or a 404% increase. In hindsight, the World Gold Council must have sensed trouble on the horizon right before gold peaked in September of 2011, and tried to make an investment case that covered the whole spectrum of economic conditions.

Source: http://seekingalpha.com/article/1382951-gold-s-double-whammy-is-in-play

Physical Gold ETFs: Which One is Right for You?

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Physical gold ETFs backed by bullion have become popular tools for investors seeking an inflation hedge and insurance against major global events. However, gold ETFs vary in their fees and where the bullion is stored, for example.

From a technical perspective, gold ETFs are trading right around the 200-day simple moving average. Gold prices have also fallen below $1,700 an ounce heading into year-end. Continue reading →