Christian Magoon: Gold ETF investors were once again disappointed by Federal Reserve Chairman Ben Bernanke on Tuesday. His comments to the Senate Banking Committee offered no signs of another round of stimulus to boost the U.S. economy. Instead Bernanke spoke of a U.S. economic recovery that was being held up by fiscal policy uncertainty in the United States and developing events in the EU debt crisis. Yet despite those concerns, the Fed Chairman didn’t tip his hand on impending liquidity actions which sent markets, and gold ETF products, lower.
The largest gold ETF, the SPDR Gold Trust (NYSEARCA:GLD) was down close to 1% in mid day trading. Here’s the intra day GLD chart from Google Finance.
Another stimulus would be bullish for investors in gold ETF products as investor allocations would likely transition to embrace more risk. The U.S. Dollar would likely weaken, which would benefit gold as it is primarily priced in U.S. Dollars. In addition the increased risk appetite would see more flows into hard assets like gold and gold ETF products.
Gold ETFs had appreciated close to 10% through February of 2012. Comments squelching hopes of a QE3 by the Federal Reserve in late February however sent gold plunging. This decline has continued to last into the summer months despite renewed hopes of QE3 due to less than spectacular economic numbers being reported across the globe.
Gold ETF products tracking the price of gold are currently in positive territory in 2012 but continue to flirt with going red. iShares Gold Trust (NYSEARCA:IAU), the second largest gold ETF and the least expensive, continues to outperform the much larger GLD. Gains on all physical gold ETFs through the close of business on Monday June 16, 2012 were around 1.5% for the year. Here is the complete gold ETF list snapshot from GoldETFs.biz.
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.”