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Weekly Wrap: Gold Miner ETFs Plunge After ‘Death Cross’


Market Vectors Gold Miners (GDX) is on track for a 7% loss in the holiday-shortened week after experiencing a so-called death cross, although the technical pattern has a mixed history for predicting future price moves.

Its small-cap cousin, Market Vectors Junior Gold Miners (GDXJ), is on pace for a decline of 8% this week. GDXJ is on a five-day losing streak.

Both gold miner ETFs have recently seen the 50-day moving average cross below the 200-day moving average, a bearish event according to some technical analysts.

The miner funds have been lagging bullion prices as measured by SPDR Gold Trust (GLD) and other gold ETFs since the beginning of November.

“The argument might be that we just don’t need gold mining stocks as a vehicle to get long gold since we now have the GLD, one of the biggest ETFs on the planet,” writes J.C. Parets at All Star Charts.

Miner ETFs fell with gold prices this week, while in stocks the S&P 500 rose to test the key 1,500 level.

The S&P 500 was on track for a weekly gain of 1% in afternoon trading Friday, while the Dow added 1.7% and the Nasdaq Composite climbed 0.4%. Nasdaq-100 and technology-sector ETFs continue to be weighed down by the decline in Apple (AAPL) shares. [Nasdaq ETF Lagging S&P 500 on Apple Wipeout]

Meanwhile, volatility-linked products such as iPath S&P 500 VIX Short Term Futures ETN (VXX) dropped to new all-time lows this week as investors grow more confident in the stock rally. VXX was on track for a weekly decline of nearly 5%.

Looking ahead to a busy next week, investors will get economic reports on durable goods orders, pending home sales, housing prices, consumer confidence, and personal income and spending. Also, on Wednesday the markets will get a report on fourth-quarter GDP and the Federal Reserve announcement. The January employment report crosses on Friday.

Market Vectors Gold Miners


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.