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Gold, Silver Miner ETFs Down Over 10% for Week


ETFs tracking gold and silver miner stocks continued to plunge this week to new multiyear lows as precious metals were also under severe pressure.

Market Vectors Junior Gold Miners ETF (GDXJ), Market Vectors Gold Miners (GDX) and Global X Silver Miners ETF (SIL) were all poised for weekly losses of more than 10% in afternoon trading Friday.

GDXJ, the small-cap gold miner ETF, has shed half its value over the past six months.

Gold prices fell below $1,400 an ounce this week with investors favoring riskier assets like stocks and dialing back inflation expectations. SPDR Gold Shares (GLD) was on track for a weekly loss of nearly 6%. Meanwhile, PowerShares DB US Dollar Index Bullish Fund (UUP) has been strong on speculation the Federal Reserve may ease back on its bond purchases. [Gold, TIPS ETFs See Outflows]

Absa Investments analyst Craig Pheiffer in a Business Day report said rising operating costs and the damaging consequences of strike activity on production have amplified the negative sentiment towards gold stocks. “Gold miners also fall into the resources category (that are suffering ) from lower prices because of weaker demand.”

In the major U.S. stock indices, the S&P 500 was set for a weekly advance of 1.7%, the Dow gained 1.3% and the Nasdaq Composite added 1.5%. [S&P 500 ETF Eyes Fresh Record on Consumer Sentiment]

“You’ve got the leading indicators helping the market today,” said Thomas Nyheim, a fund manager for Christiana Trust, in a Bloomberg report. “We’re seeing good signs for the economy, you’re getting this grinding, slow growth that just keeps coming out.”

The top three unleveraged ETFs this week were Global X FTSE Greece 20 (GREK), Guggenheim Global Solar Energy (TAN) and PowerShares Wilderhill Clean Energy (PBW) with gains of at least 6%.

The bottom three unleveraged ETFs this week were the gold and silver miner ETFs – GDXJ, GDX and SIL.

In next week’s economic data, look for reports on existing home sales, new home sales and durable goods orders. Federal Reserve chief Ben Bernanke speaks on Wednesday and investors will also get the minutes from the latest Fed meeting.

Market Vectors Junior Gold Miners ETF

Full disclosure: Tom Lydon’s clients own GLD.

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.