Christian Magoon: Gold ETF Fund Prices Up Sharply. Gold ETF fund products like the SPDR Gold Trust (NYSEARCA:GLD) and the iShares Gold Trust (NYSEARCA:IAU) have been suffering through most of the EU debt crisis. Now it appears the funds may be in for a bit of a revival as U.S. jobs data came in weaker than expected sparking the hope of a QE3. At the same time another round of stimulus in China is expected – perhaps as soon as this weekend. Gold ETF fund prices have reacted accordingly with IAU trading almost 3.5% higher in early Friday trading. Here’s the latest pricing from Yahoo Finance.
GLD and IAU Performance Reversal
Friday’s rally reverses a negative week for gold ETFs. In addition it counteracts a 6% decline for gold in May, its worst drop during the month of May in 30 years. Here’s the recent performance grid showing Thursday’s gold ETF fund performance as well as longer term periods from GoldETFs.biz.
A revival in gold ETF fund performance will be received well by investors in gold who have been using it as a safe haven. For most of this year gold has been bypassed as a safe haven asset in favor of the U.S. Dollar. However weaker economic data from the U.S. and China now seems to be placing the probability of another round of liquidity by central banks on the table. More liquidity would devalue currencies like the U.S. Dollar and free up cash to be placed in so called “risk on” assets. Both of these trends would likely benefit gold prices as well as gold stocks.
Today’s move upward in gold, should it hold, will push gold ETF fund returns into positive territory for the year. The iShares gold trust (IAU) has been the best performing ETF focused on gold or gold stocks in 2012, losing .13% for the year as of Thursday.
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.”