Shares of gold focused exchange traded funds ended the week on a positive note after starting out slow. Physical gold ETFs finished slightly positive with the two largest gold ETF funds, the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) returning just 9bps and 12bps respectively. Here's the performance grid snapshot for the entire physical gold ETF universe.
Products focused on gold stocks like miners and explorers had a much better week than gold price ETFs. The small cap mining stocks outperformed which meant that the Market Vectors Junior Gold Miners ETF (GDXJ) surpassed the large cap focused Market Vectors Gold Miners ETF (GDX) for the week. Trailing the two funds was the only gold ETF focused on exploration stocks, the Global X Gold Explorers ETF (GLDX). Here's the snapshot from the performance grid on GoldETFs.biz.(click to enlarge)
The first few days of the week for gold were negative to neutral as investors digested the big gains from the week before. However as the week went on, several notably bullish events occurred that helped gold ETF products to avoid a decline due to profit taking. Here's the annotated chart from the NASDAQ interactive chart center. It features the SPDR Gold Trust, the Market Vectors Gold Miners ETF and the Market Vectors Junior Gold Miners ETF.(click to enlarge)
On Wednesday significant developments began to occur as the Bank of Japan announced that it would increase its financial stimulus effort to boost its faltering economy by over $126 billion dollars. The announcement had an interesting impact on the market as products like GLD were mostly flat but gold miners jumped upward. The Bank of Japan's liquidity boost followed similar efforts recently announced by the European Central Bank and the U.S. Federal Reserve. Each one has been bullish for gold and gold stocks. This is because the actions by central bankers create more demand for scarce assets like gold while at the same time decreasing the value of paper currency due to increased supply.
Thursday saw the fabled and bullish "golden cross" occur which is simply the 50 day moving average price of gold cross of the 200 day moving average price of gold. This event was touted as a key indicator of future positive momentum for gold and the markets appeared to agree. Finally on Friday, gold was highlighted by a prominent hedge fund manager on CNBC which contributed to the positive gold momentum.
Going forward there is sentiment that gold will continue its positive momentum. The Kitco News Gold Weekly Survey found that 15 of 21 participants see gold prices maintaining upward momentum next week. Developments that could help or hurt that momentum this week include U.S. economic reports like the consumer confidence index, new homes sales, updated gross domestic product numbers. Internationally developments in Europe and the Middle East will be closely watched as well. For now however, it appears glold is in the midst of a rally that still has momentum.
Additional disclosure: Christian Magoon is Publisher of gold ETF focused site GoldETFs.biz.