Technical Weakness Continues For Gold and Metal Miner ETFs (GLD, SGOL, IAU, DGL, XAU, GDX, GDXJ, SIL, SLV, SIVR)
On July 2nd, David Chojnacki, market technician of Street One Technical Analysis, LLC (one of our affiliates) put out a note in our “S1F ETF Daily” that (NYSE:GLD) – SPDR Gold Trust “broke down last session below two important levels of support ($120.70 and $117.25) and is “no longer a buy at these levels.” Before the ugly trading action on July 1st, Chojnacki had previously been technically bullish in (NYSE:GLD) and related Gold ETFs since April of 2010 (approximately the $112 range in GLD).
On July 11th, with (NYSE:GLD) rebounding somewhat andtrading around the $119 level, a note was published by Street One Technical Analysis LLC to our Seeking Alpha instablog speaking of bearish institutional options activity that we observed in (NYSE:XAU) – Gold and Silver Miners Index that seemed to be a play on the burgeoning technical weakness in the Gold commodity ETFs (GLD, SGOL, IAU, DGL, etc.). In the (NYSE:XAU), bearish combos traded (buyers of puts and sellers of calls, taking outright short positions in the index) in September options. Based on recent action in the sector, these trades appear to be well timed.
Today, Gold commodity ETFsare down nearly 2%, with (NYSE:GLD) and related Gold ETFs are trading at their lowest lowest levels since May. Peripherally, (NYSE:XAU) has experienced a steep selloff today as well, as has related Gold Mining ETFs, (NYSE:GDX) – Market Vectors Gold Miners and (NYSE:GDXJ) - Market Vectors Junior Gold Miners. Silver and Silver Mining related ETFs, as mentioned in the instablog report from Seeking Alpha on July 11th are also weak today (SIL, SLV, SIVR).
We will continue to monitor institutional options flows in the Gold and related Mining ETF and index products for further possible signs of continued weakness, or a possible reversal to the upside.
Street One Financial LLC (S1F), is a full service shop specializing in ETF’s, equities, and options. S1F UTILIZES THE BROKER/DEALER SERVICES of Emerging Growth Equities (EGRO), a registered Broker Dealer and member of SIPC/FINRA. S1F specializes in agency ETF/ETP, equities, and options trade execution. On the ETF/ETP end, S1F works withthe ETF issuers to understand their products thoroughly and how they can complement an investor’s portfolio. We assist portfolio managers in constructing their portfolios and identifying which ETF provides the best desired exposure by portfolio objective, fees and ease of trading. The ETF/ETP landscape is evolving rapidly andhas diversified quickly beyond passive equity index ETFs. Now actively managed strategies, fundamental and quantitative ETFs, as well as those that offer exposure to Fixed Income, Commodities or even Volatility Indexes are available to investors. That said, understanding how specific products work and where they fit within portfolios and perhaps more importantly, “how to trade” these products, has become something of major importance to portfolio managers on all levels. At S1F, we assist portfolio managers in screening by true underlying liquidity, not “shown liquidity” or “perceived liquidity” as reflected by average daily trading volume. S1F then sources liquidity without identity or information slippage, through all available access points in the marketplace to minimize the market impact of the trade, delivering a lower total cost of trading to the portfolio manager. This allows the portfolio manager to, in essence, recapture basis points on each trade, and outperform their competitors over the course of the year, while maintaining a competitive edge over their peers. All trades executed by Street One are cleared andsettled with NFS/Fidelity.
Investors have turned to gold ETFs as a safe haven during the recent stock market turmoil. They offer a great way to protect you against risk in your portfolio during uncertain times. We have put together some other ETF gold options for your viewing below:
The investment SPDR Gold ETF (NYSE:GLD) seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.
The investment ETF (NYSE:GDX) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the AMEX Gold Miners index. The fund generally normally invests at least 80% of its total assets in common stocks and American depositary receipts (ADRs) of companies involved in the gold mining industry. The fund is nondiversified.
The Funds ETF (NYSE:GDXJ) investment objective is to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Junior Gold Miners Index (the “Junior Gold Miners Index”). For a further description of the Junior Gold Miners Index, see “Junior Gold Miners Index.”
The objective of ETF (NYSE:SGOL) the newly listed shares is to reflect the performance of the price of Gold bullion, less the Trust’s operating expenses. The Trust is open ended and is designed for investors who want a cost-effective(1) and convenient(2) way to invest in Gold as well as diversify their Gold holdings.
The investment ETF (NYSE:UGL) will seek to replicate, net of expenses, twice the performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics twice the return of the index. It may employ leveraged investment techniques in seeking its investment objective.
The investment ETF (NYSE:DGL) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Gold Excess Return. The index is a rules-based index composed of futures contracts on gold and is intended to reflect the performance of gold.
The investment ETF (NYSE:DGP) seeks to replicate, net of expenses, twice the daily performance of the Deutsche Bank Liquid Commodity index – Optimum Yield Gold Excess Return. The index is intended to reflect changes in the market value of certain gold futures contracts and is comprised of a single unfunded gold futures contract.
The objective ETF (NYSE:IAU) of the trust is for the value of its shares to reflect, at any given time, the price of gold owned by the trust at that time, less the trust’s expenses and liabilities. The trust is not actively managed. It receives gold deposited with it in exchange for the creation of baskets of iShares, sells gold as necessary to cover the trust’s liabilities, and delivers gold in exchange for baskets of iShares surrendered to it for redemption. The trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act.
The investment ETF (NYSE: DZZ) seeks to replicate, net of expenses, twice the inverse of the daily performance of the Deutsche Bank Liquid Commodity index – Optimum Yield Gold Excess Return. The index is intended to reflect changes in the market value of certain gold futures contracts and is comprised of a single unfunded gold futures contract.
The investment ETF (NYSE: GLL) will seek to replicate, net of expenses, twice the inverse daily performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics inverse to the index. It may employ leveraged investment techniques in seeking its investment objective.