Exchange traded funds that invest in gold miner stocks fell more than bullion-backed ETFs during Thursday’s sell-off in precious metals in what has become a familiar pattern this year.
Market Vectors Gold Miners (NYSEArca: GDX) fell 2.5% at last check Thursday while iShares Gold Trust (NYSEArca: IAU) slipped 1.8%. [Gold ETFs Down on ECB Comments]
Year to date, the miner ETF is down 4% while the gold fund has gained 22%, not including Thursday’s action. [Gold Miner ETF Aims for 2011 High; Einhorn Buys]
Leveraged ETFs indexed to miner stocks such as NUGT (Direxion Daily Gold Miners Bull 3X) and DUST (Direxion Daily Gold Miners Bear 3X) were seeing big moves Thursday as the sector fell. [ETF Chart of the Day: Gold vs. Miners]
Investors must understand that gold and gold stocks “are entirely different markets that share different performance in a panic or crisis,” writes Jordan Roy-Byrne at The Daily Gold. “Gold can be a safety hedge, but gold stocks most certainly are not. They are the worst performers in any type of crisis.”