3 Reasons Why Gold ETFs Are on a Rush

Gold prices are on the climb again toward that all-important psychological barrier of $1,000 per ounce. Fears of inflation and market uncertainty could continue to push ETF higher.

3 factors are driving the latest run-up in gold prices:

• The concerns over inflation are dominating investors’ actions.
• Investors may be feeling bearish over a possible decrease in equity stocks.
• Inflation concerns may not be the major reason investors are turning to the safe haven metal. Yields on the 10-year treasury note are still heading lower, so investors are still buying government debt and therefore not overly concerned that interest rates are going to eat into their returns, explains Matt Phillips for The Wall Street Journal.

Tennille Tracey for The Wall Street Journal reports that the price of gold jumped nearly $22 to close at $977 per ounce, its highest close since June 4.

While the U.S. dollar has slipped, one strategist notes that it hasn’t lost enough value to trigger a gold shopping spree. Speculation rests with the possibility that some investors are bracing themselves for a slide in stock prices.

• SPDR Gold Shares (GLD): up 8.5% year-to-date

• PowerShares DB Gold (DGL): up 9.8% year-to-date

Comments

[RECESSIONPROOF:]

gold etfs are in a rush because gc price went up, its called bubble buying

Sep 06 04:03 PM

[ron_paulite:]

do u think TPTB will allow it to breach $1000 for too long?

remember what paul volcker said about gold in the early 70's?
<<In looking back at the rise of gold from $35 to $850 during the 1970s', Paul Volcker said, "It was probably a mistake to allow gold to rise so high.">> from gold-eagle.com

do u think they will make the same mistake again?

i'm bullish on gold and hold physical gold.
i don't hold paper gold, e.g. GLD etf, anymore.
if i do, i will be selling them soon.

Sep 07 12:28 AM

[Indexor:]

Ron:

TPTB (not TPBT) = The Powers That Be

Sep 07 09:59 AM

[CLH:]

Gold is the last bubble for now. It hit 1000 3 times and has little left.

Sep 07 10:20 AM

[highlarche:]

The truth can only be hidden for so long. The short position on silver is huge. I see a breakout which will boggle the mind. Remember back in 1980 when gold hit 840 silver hit 50. I know that the Hunt brothers cornered the market back then, but lets be conservative and I see 25$ silver.

Sep 07 10:28 AM

[ron_paulite:]

On Sep 07 08:36 AM Geezer Bela in Exile wrote:

> Two questions:
>
> 1. What is the TPBT?

The Powers That Be

> 2. What is the method used to control gold prices?

Google GATA

Sep 07 11:21 AM

[Old Rick:]

With all the "excitement" about gold getting to the record $1,000 mark, note that in inflation adjusted dollars, gold hit around $2,700/oz. in 1980.

Sep 07 12:33 PM

[buddhabill:]

Look at the G-20 meeting this weekend...they are still posturing to increase confidence in the banking system, hence a coordinated attach on gold is likely.

Gold will require a black swan along the lines of:

1. massive bank failures
2. iran gets attacked
3. dollar collapses
4. china actually defaults on derivative positions
5. h1n1 goes berserk, or mutates into something really scary

to really get going. Inflation is not a near term risk but it is a long term inevitability.

I'm looking to establish a position in AGQ, the silver 2x, on the likely pull-back. In the long run any any position in silver or gold at these levels will likely be richly rewarded, I just believe another dip is coming early this week.

Sep 07 02:47 PM

[slayer:]

The real reason is rockstar daytrader push it etf because the government owns now and they are using Mortage back securities and treasury as the backing instead of gold

Sep 07 08:51 PM

[ClayBoy:]

Well IMOHO, inflation already is taking hold and is evident when you look at the dirty tanker rates and compare that with the price of oil. Tanker rates are way down south and crude oil is way up from its lows. This means that demand for oil, and ships, is low; yet the price of oil is going higher. That my friends is very evident inflation. Buy gold , oil , silver , comodities , anything but dollars. America has already fallen to the socialist regime and it is too late to recover. Get those sorry people off of capitol hill and we will recover but even then it is going to take a very long time.

Sep 07 10:28 PM

[User 483243:]

Just Chinese buying of physical alone will send us to $1,250 before the end of the year. Americans still believe pieces of paper are their financial salvation, when the last 10 years has shown that stocks were a very bad investment. That trend is going to continue. If an audit is performed by a trusted third-party of any of these Paper Gold instruments, i.e., Gold ETF's, it is likely to reveal that the funds contain much more paper gold instead of the physical that investors think that they are buying. While supposedly the simpler way to buy gold and silver than calling up a bullion broker, they lose control over their precious metals and have no way to verify the existence of same. CONFIDENCE. Once it is shattered as with the Dollar, which is main impetus behind $1000 breach today, is impossible to regain in the short term. Buy Physical, then you know what you have and can control your own destiny out of paper crap.

Sep 08 08:20 AM

[chap08:]

On Sep 07 12:33 PM Old Rick wrote:

> With all the "excitement" about gold getting to the record $1,000
> mark, note that in inflation adjusted dollars, gold hit around $2,700/oz.
> in 1980.

This is actually pretty meaningless because in 1980 gold really WAS in a bubble. To determine if gold is in a bubble now, you need to look at the longer term picture. Pick your own (reasonable) historical date and you will see that gold returns have pretty much equalled inflation. So, to me, gold is not in a bubble now. However, if I was asked to pick the most likely asset class for the next bubble, I would pick precious metals.

Sep 08 12:04 PM

[Jeff Diercks:]

I agree with buddhabill. So far every time gold has approached the magic $1,000 per ounce level it has done so on successively less volume.

At least in the short run, I would be surprised if we get by this major resistance level.

Sep 08 04:38 PM

[whidbey:]

The move has got to be ill timed unless the market knows something we do not sense as yet. This fall the equities are headed for a blood bath, why would gold escape?

Sep 08 05:00 PM