Gold, Silver ETFs Lead the Way Lower; Financials Gain

Nick Perry (Schaeffer's Investment Research) submits: Last week we saw a broad-based rally that was led by the PowerShares WilderHill Clean Energy (PBW) and SPDR Homebuilders (XHB). This week we see a skew to the downside.

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Despite the widespread buying that set in this morning after the Fed cut the discount rate by 50 basis points, more than 70% of the funds on my list are still lower on the week.

Gold stocks, once considered a safe haven in times of market turmoil, were the weakest area. The Gold Miners ETF (GDX) posted a substantial loss of nearly 12% and hit levels not seen since last October. Silver was also weak.

Last week's 2 strongest ETFs, the PowerShares WilderHill Clean Energy (PBW) and SPDR Homebuilders (XHB), saw those gains evaporate.

The main pocket of strength this week came from the financial sector as banking and insurance ETFs dominate the top of the list.

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Index performance this week

Index performance year to date

Charts: Google Finance

Comments

[Jim Glazen:]

Stupid Goldbugs thought the credit bust would be the main event that powered gold to all-time highs. They didn't realize that Gold is in the same boat as everything else. Steel, copper, titanium, small-cap stocks, houses, classic cars....all in the same credit bubble boat.

lmfao!!

2007 Aug 18 05:32 PM

[Carl leason:]

Nick,...You better wake up ! Like Jim said, this is pure specullation !
When times go bad, really bad,...do you think you can take a bar of gold to your local bank and get cash or go the local grocery and get food ? Get serious,...I could never figure out people who get involved in pure speculation. Like the housing bubble,...not braging but I saw that bubble coming when prices were on the way up ,..way, way up ! Housing is an easy one to "Do the MATH !" If you buy a home, especially as an investor, you better figure all the costs and the probable income, and then tell yourself if it will at the very least,...PAY FOR ITSELF ! Most of todays investors are of the "Herd" mentality,...if joe Blow says it's a good idea and Joe does it, then it must be great,...right ? WRONG,..if you don't do the math,...meaning calculating "Return on Investment ".... it can be a real disaster, like Gold and housing !!
Gold is worth only what people are willing to pay, which is truly dumb ! At least with housing, one can calculate what the return should be ! There are so many MILLION $$ waterfront high rise condos for sale all over, it's really mind boggeling ! What are these people thinking ? There is no way that one can put 20-30 pct. down and have rental income pay for it ! Think I am wrong,...then "Do the math " !!! LC

2007 Aug 19 10:11 PM