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Wednesday, July 18, 2012

Gold Miner ETFs Dig a Hole

English: 1 oz (Troy ounce) of fine gold Deutsc...
English: 1 oz (Troy ounce) of fine gold Deutsch: Eine Unze Feingold mit Zertifikat (Photo credit: Wikipedia)
Gold miner stocks and exchange traded funds have continuously lagged behind physical gold prices. However, as spot gold beings to move higher, producers may see their profit margins widen.
SPDR Gold Shares ETF (NSYEArca: GLD)is up 1.4% year-to-date, whereas theMarket Vectors Gold Miners ETF (NYSEArca: GDX) is down 14.0% year-to-date. Spot gold prices recently dipped back below their 50-day resistance levels to trade under $1,600 an ounce. Loose monetary policies and deficits in the U.S. and Europe will keep their currencies depressed, allowing gold to potentially shine, Live Trading News reports. “Loose monetary policies, with a scope for more aggressive balance sheet use in the US and Europe, will keep real [interest] rates in most reserve currencies low (or negative) during 2012,” according to a Merrill Lynch note. “We continue to believe that this will allow investor demand to remain strong and prices to reach our $2,000 an ounce target by the end of the year.” However, gold will have to first breach a critical level before gaining back its momentum. ... Continue to read.
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