Following right along with gold prices, exchange-traded funds tied to gold saw inflows on Thursday and Friday of last week in the wake of the Federal Reserve balking on moving its benchmark interest rate at this week’s meeting. As investors took the Fed decision (or non-decision) as a sign that economic conditions may not be especially good, the safe haven appeal of the precious metals again took center stage.
The Major Gold ETFs
Three of the most-traded gold ETFs are the SPDR Gold Shares ETF (NYSEARCA:GLD), the Market Vectors Gold Miners ETF (NYSEARCA:GDX), and the Direxion Gold Miners ETF (NYSEARCA:NUGT). While GDX and NUGT are tied directly to the fates of certain gold mining stocks, the popular SPDR Gold Shares ETF (GLD) is backed by actual holdings of secured gold bullion.
GDX and NUGT largely track together (see the charts below), and differ only in the share price ($14 vs. $3) and the total amount of exposure to gold miners shareholders would like.
Both NUGT and GLD rose to close out last week, rising 1.8% and 1%, respectively. Though the same fundamentals driving the gold price will essentially remain in place until the next opportunity for the Fed to raise rates, a minor rally for the dollar caused GDX (along with most of the other gold ETFs) to give back most of its gains from Friday. Nonetheless, on whole, gold ETF shares outperformed equity ETFs in the aftermath of the Fed standing pat.
GLD also lost 0.6% on Monday, plunging at the opening bell before trading flat the rest of the session. In after-hours trading on Monday night and into pre-market moves on Tuesday morning, NUGT lost about 7% as spot gold tumbled by about 1%, or more than $11 per ounce lower.
Medium- and Low-Volume Gold ETFs
In addition to the major exchange-traded products linked to gold, there are several other ETFs that don't normally see quite the same volumes in trading, but are still made to track with the gold mining sector or the gold bullion market generally.
The medium tier is mainly occupied by the iShares Gold Trust ETF (NYSEARCA:IAU). After gaining about 3.3% over the course of last week, IAU opened nearly 1% lower on Tuesday. This followed shares of IAU tracking lower with the other gold mining ETFs on Monday.
On the lower-volume end, the ETFS Gold Trust (NYSEARCA:SGOL) and the ProShares Ultra Gold ETF (NYSEARCA:UGL) both sank in early trading on Tuesday, with the former falling nearly 1% and the latter losing twice as much. SGOL is similarly priced to GLD, each around $110 per share, but has a far lower market capitalization (less than $900 million, vs. $24.5 billion for GLD) and sees only a fraction of the trading volume.
Meanwhile, over the last 6 weeks or so, UGL has recovered from a 6-year low established at the start of August back to about $34 per share, but is still down 28% from its 52-week high.
Two more smaller-volume funds, the PowerShares DB Gold Fund (NYSEARCA:DGL) and the Merk Gold Trust (NYSEARCA:OUNZ), have shown a similar lockstep pattern to NUGT and GDX over the last month.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.