Gold ETF Report: Physical Gold Trouncing Gold Stocks (GLD, GDX, IAU, GDXJ, SGOL, GGGG)

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May 21, 2012 6:01pm NYSE:GDX NYSE:GDXJ

Christian Magoon: Gold ETF products that track the price of gold through holding bars of gold are positive for the year while gold stock ETFs are well into negative double digit territory.

The disconnect between gold prices and gold stocks is significant this year and many investors are finding out that using gold ETF products focused on gold stocks can be a painful indirect way to play gold prices. The two largest physical gold ETF products, GLD and (NYSEARCA:IAU), have managed gains of at least 1.6% in 2012. In contrast, the two largest gold stock ETFs, (NYSEARCA:GDX) and (NYSEARCA:GDXJ), have lost between 19% – 24% of their value year to date. Much of this decline has occurred over the last month as the European crisis has increased its intensity. Here’s a partial snapshot of the performance grid sorted by four week performance.

As evidenced in the chart, gold ETF products that are focused on gold stocks have experienced the brunt of the pain recently as gold prices and equity valuations have combined to force these ETFs down further than their physical gold ETF counterparts.

Gold ETF Breakdown: Physical

Physical gold ETF products are now clinging to a positive year to date return after a week that saw a bounce in their prices. IAU continues to lead rival GLD but the Swiss Gold Trust (NYSEARCA:SGOL) has settled into second place, ahead of GLD, for performance in 2012. Here’s the year to date performance grid of all U.S. listed physical gold ETFs.

Gold etf list May 2012

Gold ETF Breakdown: Stock

Gold ETF products focused on mining and exploration companies can only wish for positive returns as year to date the best performing ETF in that peer group, (NYSEARCA:GGGG), has lost 17%. The current year to date double digit declines follow a 2011 that saw most gold stock ETFs in the red as well. In fact, the second largest gold stock ETF, GDXJ, is now down 47% over the last 12 months. Here’s the year to date performance grid of all gold ETF products in the gold stock peer group.

gold mining etf list, gold stock etf performance

This coming Wednesday there will be an important EU meeting regarding austerity and overall EU fiscal policy. Should good news emerge, it may dilute the current “risk off” stampede in the markets which has been strengthening the U.S. Dollar – a bad development for gold. While gold has not responded well to this current crisis, it does appear to be fighting back as of last week and technically it appears that gold is oversold.

To conclude, here’s the one year chart of the SPDR Gold Trust (NYSEARCA:GLD) composed on, along with GLD’s 150 day moving average. For the long term investor, the recent decline in gold ETF prices may be an attractive entry point going forward.

Written By Christian Magoon From Magoon Capital

Christian Magoon is Publisher of and 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.”

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