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This past week witnessed gold ETFs like the SPDR Gold Trust (NYSEARCA:GLD) and the iShares Gold Trust (NYSEARCA:IAU) suffer declines of 3.7% and 3.6% respectively. A "risk off" mentality flooded markets worldwide as the EU crisis took another twist spiking demand for the U.S. Dollar and further melting gold prices. Here's the short term gold ETF performance grid from

(click to enlarge)gold fund performance

Gold prices and the gold ETF products that track them have been on a descent since late February when FOMC comments stymied hopes of a QE3. Since then gold has stair stepped lower, almost erasing its year to date gains. Here's a chart of GLD since late February from

(click to enlarge)spdr gold etf chart

This past week accelerated gold's dip. After election results in France and Greece were viewed as bearish, Greek officials begin to speak of renegotiating their most recent bailout terms. That talk quickly escalated as a Greek official trying to form a new coalition government declared the bailout agreement "null and void." This spurred talks of Greece leaving the EU and contemplations of the ripple effect it would have on the world economy.

Benefiting from all of this uncertainty was the U.S. Dollar. Similar to late last year's EY flare up, investors pushed the value of the U.S. Dollar higher as demand for dollars increase. Accordingly gold, primarily priced in U.S. Dollars, began to lose value as the same amount of gold became worth less U.S. Dollars. Adding to this negative development was the larger fall in other asset prices. Some believe gold, still positive for the year and over the last 12 months, was also a victim of investors raising cash to offset new losses.

Gold ETF products tracking the price of gold are now clinging to a slight positive return in 2012. IAU, with it peer group low expense ration continues to be trailed by GLD and the Swiss Gold Trust (NYSEARCA:SGOL). Here's the year to date gold ETF performance grid snapshot.

(click to enlarge)etf gold chart, gold trust etf

Given the continued developments in Europe it is likely gold prices will continue to struggle in the short term and go negative for the year. The consolidation in gold prices has been widely talked about for awhile, as has an eventual bounce later in the year. This prediction has usually pointed to that bounce propelling gold to new highs. While this view has been oddly correct so far, one wonders how much pain gold ETF investors will be in over the coming weeks and whether gold is digging too great of a hole to reverse and achieve new highs in 2012.

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

Source: Gold ETF Report: Accelerated Meltdown