Gold ETFs Sink On Euro Chaos

Includes: GDX, GDXJ, GLD, IAU
by: Christian Magoon

Gold ETF products tracking the price of physical gold, as well as gold stocks, are sinking due to the latest flare up in the European debt drama. A strengthening of the U.S. Dollar in light of the chaos in Europe is damaging the value of gold, as gold is primarily priced in U.S. Dollars. This flight to safety was especially pronounced in yesterday's market action.

Physical gold ETF products like GLD and IAU were off close to 2% yesterday and are now down over 3% in the last week. Here's a snap shot from the gold ETF performance grid from

gold etf, etf gold fund, spdr goldClick to enlarge

Gold ETF products tracking gold stocks had a much worse reaction losing between 3.4% and 5.9% yesterday. Gold stock ETFs, like GDX and GDXJ, are now down double digits over the last week. Here's the gold stock ETF performance grid snapshot from

gold miners etf, gdx, gdxj, gggg, gldx, ringClick to enlarge

Year to date, physical gold ETF products are getting closer to a zero rate of return after briefly hitting the 10% mark earlier in the year. Here's the year to date physical gold ETF performance grid snapshot.

gold etf, etf goldClick to enlarge

As expected in a downward trend, gold stock ETF products are fairing much worse than gold. They are off 15% - 22% even after a negative 2011. Here's the grid.

Click to enlarge

While the U.S. Dollar continues to strengthen due to investors seeking its safe haven nature, gold ETF products will likely continue to suffer. We saw this trend in late Fall of 2011 when Greece was boiling over and eventually that downward move in gold was followed by a nice rally. This time however the crisis is much larger than Greece, which could mean a longer and larger decline in gold prices and the ETF that track them.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Christian Magoon publishes