It was a somewhat predictable development that once the gold price started to recover considerably to kick off October, the fates of exchange-traded products tied to gold would also get a lift. Naturally, these funds are created with the intent of tracking along with the gold price, so in that sense, it seems the gold ETFs have done exactly their job.
Let’s take a closer look at how these exchange-traded funds have performed of late.
Bouncing From the Bottom
It appears that the near-term lows for the gold ETFs have come and passed. This naturally followed the multiyear lows that gold and silver set earlier in the summer.
As far as trend-followers jumping on and off the bandwagon are concerned, the gold ETF market remains the center of the action. Trading volumes for these products have surged since July. The SPDR Gold Trust (NYSEARCA:GLD), one of the most popular gold ETFs, has enjoyed its highest volumes over the last 6 weeks since January.
Holdings in the Gold Trust jumped by the most in 9 months to close out last week, as GLD added 160,754 troy ounces (just over 5 metric tonnes) in net inflows to its bullion stockpile. This brings the total holdings of GLD past the 700 tonne mark, a fresh 3-month high.
GLD is not the only gold ETF that’s been doing well of late. In fact, 6 of the top 10 performing exchange-traded products over the last month are gold or silver mining ETFs. Some of the noteworthy big gainers have been the Global X Silver Miners ETF (NYSEARCA:SIL), up 22.4% in October; the Market Vectors Gold Miners ETF (NYSEARCA:GDX), up 22.6%; the iShares MSCI Global Silver Miners ETF (NYSEARCA:SLVP) has gained 25.1%; and the First Trust ISE Global Platinum ETF (NYSEARCA:PLTM) has gained 25.3%. This is just to name a few—and the month is only two-thirds through.
The surge for ETFs should be taken with a grain of salt, however, when looking at the bullion market as a whole. While many investors use gold ETFs as a quick way to diversify into precious metals, there is still no replacement for holding physical gold.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.