GLD’s Run Is Tip Of Precious Metals Iceberg

September 15, 2010

Gold isn’t the only precious metal spiking in price these days as investors run for cover.

Precious metals were all over’s top ETF performers list yesterday, a sign that gold isn’t the only safe-haven asset investors are flocking to as they worry about the health of the
economy and lose a little faith in the dollar.

Gold grabbed all the headlines on Tuesday as it climbed to a new high of $1,269.70 a troy ounce, but investors appear to be taking full advantage of the broad array of exchange-traded products that are now available as they find new ways to hunker down, wondering what happens next.

Indeed, while all the big gold ETFs—the SPDR Gold Trust (NYSEArca: GLD), the iShares Gold Trust (NYSEArca: IAU) and the ETFS Physical Swiss Gold ETF (NYSEArca: SGOL)—were among the top-20 movers yesterday, the ETFS Physical Palladium ETF (NYSEArca: PALL) and the iShares Silver Trust (NYSEArca: SLV) were the No. 1 and No. 3 performers, with gains of 3.7 percent and 2.6 percent, respectively.

Today, that dynamic was even clearer, with PALL up another 0.7 percent, while GLD was taking a breather after yesterday’s 2.0 percent gain, shedding 0.1 percent.

“The common denominator here is that gold, and precious metals in general, shine when there is a loss of confidence in the dollar, in central banks or in the government,” Bill Koehler, chief investment officer of Leawood, Kan.-based ETF Portfolio Partners, told in a telephone interview.

Top 20 1-Day Performers (excluding Leverage/Inverse, >1,000 Shares Traded)
Ticker Name 1-Day Performance 1-Day Volume AUM
($, mm)
PALL ETFS Physical Palladium 3.66% 137,869 409.03
SGG iPath Dow Jones-UBS Sugar Subindex Total Return ETN 2.89% 89,390 75.92
SLV iShares Silver 2.61% 12,760,134 6,099.10
DBS PowerShares DB Silver 2.52% 24,312 79.38
SIVR ETFS Physical Silver 2.46% 241,371 200.38
PPLT ETFS Physical Platinum 2.43% 119,234 468.77
JJS iPath Dow Jones-UBS Softs Subindex Total Return ETN 2.37% 2,300 13.96
PTM UBS E-TRACS CMCI Long Platinum Total Return ETN 2.37% 40,979 62.30
PGM iPath Dow Jones-UBS Platinum Metals Subindex Total Return ETN 2.26% 13,334 77.94
JO iPath Dow Jones-UBS Coffee Subindex Total Return ETN 2.12% 13,320 24.54
JJP iPath Dow Jones-UBS Precious Metals Subindex Total Return ETN 2.11% 6,800 14.70
DBP PowerShares DB Precious Metals 2.11% 58,831 304.95
DGL PowerShares DB Gold 1.99% 54,987 243.30
GLD SPDR Gold 1.98% 26,588,844 52,830.97
SGOL ETFS Physical Swiss Gold 1.97% 206,116 863.43
ULE ProShares Ultra Euro 1.96% 9,760 13.48
IAU iShares COMEX Gold 1.89% 3,603,630 3,988.68
NIB iPath Dow Jones-UBS Cocoa Subindex Total Return ETN 1.81% 78,585 11.57
COW iPath Dow Jones-UBS Livestock Subindex Total Return ETN 1.59% 47,303 72.17

Secular Bull Market

Koehler said the Federal Reserve’s recent announcement that it was likely to launch into a second round of so-called quantitative easing involving the purchase of Treasurys to keep bond yields low enough to help stimulate economic activity is a big reason behind the recent run-up in metals that included gold hitting a record.

The Fed’s announcement means that the government will be “printing more money,” and that erodes faith in the dollar, Koehler said. Amid the fears that the
might be sliding back to its doldrums instead of emerging from its worst economic downturn since the 1930s, gold is increasingly viewed as a timeless safe haven.

“We are in a secular bull market for gold,” Koehler said. “Gold prices have been going up for some 11 years now, and we are still seeing double-digit returns.”

GLD was third on’s creations list on Tuesday, bringing in another $247.3 million and lifting its assets to $52.83 billion.

“You go back 30 years, and you see that gold is not overvalued relative to stocks right now,” Koehler said. “Gold prices have a ways to go. Long-term charts … show that gold could easily go to $2,000 an ounce.”



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