Gold, Treasuries and Dollar ETFs: Connecting the Dots

September 17th at 1:00pm by Tom Lydon

Gold prices are at record highs. Treasury bond yields are the lowest in decades. The U.S. dollar is swooning. The recent direction of exchange traded funds (ETFs) tracking these asset classes can tell us a lot about the economy.

Although the markets don’t appear to be locked in any downward spiral these days, it’s hardly boom times. Investors are still worried about the present and not much more optimistic about the future,  comments Tom Petruno for The Los Angeles Times. These concerns have had a negative impact on many corners of the market, but not all.

Gold, Treasury and dollar ETFs have been on a tear this year, luring investor assets by the billions with every move in sentiment.

The euro appreciated against the dollar to a five-week high on Monday, and the dollar also depreciated to a 15-year low against the Japanese yen. Analysts credit the falling greenback to further reductions in the interest rates. [Why Currency ETFs Yen for an Intervention.]

  • CurrencyShares Euro Trust (NYSEArca: FXE): up 5.9% in the last three months
  • CurrencyShares Japanese Yen Trust (NYSEArca: FXY): up 6% in the last three months

Furthermore, Goldman, Sachs & Co. Chief Economist Jan Hatzius believes that the Federal Reserve will expand its purchases of Treasury bonds to as much as $1 trillion. The 10-year T-note dropped to 2.73% on Friday.

  • iShares Barclays 7-10 Year Treasury Bond Fund (NYSEArca: IEF): up 3.9% in the last three months; yields 3.05%
  • PIMCO 7-15 Year U.S. Treasury Index Fund (NYSEArca: TENZ): up 0% in the last three months; yields 3.04%

Investors who weren’t too thrilled by the record low yields on Treasuries opted for commodity investments like gold, pushing it to new records this week. While this has sparked concerns of an imminent sell-off, for now, gold is enjoying its lofty perch. [Why Investors Want Gold and Silver ETFs.]

  • SPDR Gold Shares (NYSEArca: GLD): up 3.5% in the last three months
  • iShares Comex Gold Trust (NYSEArca: IAU): up 3.5% in the last three months
  • ETFS Physical Gold Shares (NYSEArca: SGOL): up 3.4% in the last three months

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.