ETF Weekly Review: Miner, Precious Metals Party on QE3

ETF Trends

Stock ETFs enjoyed their second week of solid gains with long-suffering miner shares leading the way on the Federal Reserve unveiling its third installment of bond purchases.

Gold and silver ETFs also rallied this week as the market got what it wanted in terms of further easing from central banks.

Gold and silver prices on Friday climbed to their highest levels in about six months.

On Thursday, the Fed extended its low-rate pledge and said it would buy more mortgage securities. “In addition to providing support to the financial markets and economy, these actions are buoying gold prices,” HSBC strategists said in a MarketWatch report.

The Fed’s QE3 announcement also fueled a rally in stocks. The S&P 500 was on track for a 2.1% weekly advance in afternoon trading Friday, while the Dow also gained 2.1% and the Nasdaq Composite added 1.7%.

SPDR S&P Metals & Mining (XME) was poised to rally nearly 10% on the week.

Gold and silver miner ETFs have been outperforming precious metal prices the past month in a potential reversal of the long-term trend. [Are Gold ETFs to Blame for Manager Underperformance?]

For example, Global X Silver Miners ETF (SIL) is up 30% the past four weeks to lead all unleveraged ETFs. [Podcast: Silver Miner ETF]

This week, the top three unleveraged ETFswere Market Vectors Rare Earth/Strategic Metals (NYSEArca:RMEX), iPath Coffee (JO) and U.S. Natural Gas Fund (UNG) with gains of more than 10%.

Conversely, the bottom three unleveraged ETFs this week were ProShares VIX Mid-Term Futures (VIXM), iPath S&P 500 VIX Mid-Term Futures (VXZ) and PIMCO 25+ Year Zero Coupon U.S. Treasury (ZROZ) with setbacks of at least 7%.

Next week’s economic data features several reports on housing. Look for updates on homebuilder confidence, housing starts and existing home sales.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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