Gold Miner ETFs Take a Header

June 20th at 3:10pm by Tom Lydon

Gold miner stocks and exchange traded funds plunged Thursday with bullion prices after Federal Reserve Chairman Ben Bernanke on Wednesday indicated the Fed may taper its bond purchases. Speculation the Fed could move toward a less dovish stance hammered gold and miner ETFs.

The Market Vectors Gold Miners ETF (NYSEArca: GDX) dropped 6.5% Thursday and the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) plunged 8.5%. GDX has declined 42.9% year-to-date and GDXJ is down 47.8%.

The leveraged-long Direxion Daily Gold Miners Bull 3x Shares (NYSEArca: NUGT) plummeted 21.4% on heavy action, with trading volume at 17.9 million Thursday, compared to a 7.0 million average. Meanwhile, the leveraged-inverse Direxion Daily Gold Miners Bear 3x Shares (NYSEArca: DUST) surged 21.4%.

According to Bloomberg, the Fed will begin tapering quantitative easing to $65 billion a month, beginning September.

The 53-company Standardy & Poor’s/TSX Global Gold Sector Index hit its lowest intra-day price level since October 2008, reports Liezel Hill for Bloomberg.

“The gold producers have just been devastated,” Michael O’Brien, a manager at TD Asset Management Inc., said in the article. “You’ll have a heck of a time having anybody build a new mine or get financing in this environment.”

Gold futures were 6.7% lower Thursday, trading around $1,282 per ounce, the first time in three years the precious metal has traded below $1,300. [Gold, Silver ETFs Routed After Fed]

Market Vectors Gold Miners ETF

For more information on gold stocks, visit our gold miners category.

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. 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.