SPDR Gold ETF Analysis: Performance, Technicals, Outlook (NYSEARCA:GLD)
Christian Magoon: GLD Is The Leading Proxy For Gold. The SPDR Gold Trust (NYSEARCA:GLD) is the largest gold ETF in the world. It was launched in November of 2004 as the first gold ETF in the United States. The Gold Trust stores gold bars in a vault in London. This gold backs the shares of the ETF. Currently around $65 billion worth of gold is owned by the ETF. GLD’s average trading volume is substantial as many view the SPDR Gold Trust as the most liquid and accessible proxy for gold. Here’s the most recent tally from GoldETFs.biz.
The SPDR Gold Trust has been challenged this year as gold prices have been on a decline since late February. Indeed, May saw gold lose 6%, which was its worst drop in the month of May for 30 years. A big rally on June 1st however pushed the ETF back into positive territory for the year. Here’s a performance table from the GoldETFs.biz SPDR Gold Trust profile page.
SPDR Gold Trust Technicals
From a technical perspective, GLD has been trading below its 150 day moving average in 2012 far more than any time over the last few years. The latest bounce on June 1st came during a low that equaled a previous low set earlier in the year – $150. Despite this bounce, the ETF seems to still be attractive relative to its 150 day moving average. Here’s the annotated SPDR Gold Trust chart composed on stockcharts.com.
The level of gold ETF volatility index has spiked over the last few trading days to highs not seen in over six months. This is likely due to the rush into gold as poor economic data points are creating hope of another global stimulus. Here’s the gold ETF volatility index (GVZ) chart from the CBOE and its recent levels.
Going forward, gold investors will be keeping a close eye on the developments across the geopolitical spectrum. The foremost focus will be the EU debt crisis as it continues to develop. Thus far this crisis has weakened the price of gold by strengthening the U.S. Dollar.
Investors will also be watching the two largest consumers of gold, India and China, closely to gauge whether their demand for gold is fading along with their economic growth. Current talk suggests China may be trying to counteract a slowdown with an imminent stimulus package which would alleviate gold demand concerns for this nation.
Finally U.S. economic data will be watched very closely as there is growing speculation that the Federal Reserve will introduce more liquidity into the system – a great scenario for gold. All these factors point to a variety of inflection points in the near term for gold gold prices.
Christian Magoon is Publisher of GoldETFs.biz and IndiaETFs.com. He is also CEO of Magoon Capital, a strategic consultant firm to asset managers. Christian Magoon is an ETF insider, having launched over 40 ETFs in the United States to date. A widely recognized thought leader on finance and market issues, Christian regularly contributes to many financial media outlets. Prior to forming Magoon Capital in 2010, Christian was President of Claymore Securities (now Guggenheim Investments), where he built one of the fastest growing and most innovative ETF businesses in the country, gathering more than $3 billion in AUM in three years. He launched more than 40 ETFs, introducing many “firsts” to the U.S. market, including the first Frontier Markets, Sector Rotation, Solar Energy, Timber, BRIC and suite of China focused ETFs. Christian consistently provides his industry insights and knowledge as a commentator in the U.S. media speaking publicly on macro investment issues and ETF related topics. Follow him on Twitter@ChristianMagoon. In 2008, he was named by Institutional Investor News as one of the five people to watch in the U.S. ETF marketplace. In 2011, Financial Planning magazine dubbed Christian an “ETF Pioneer.”