Gold prices have fallen below $1,700 an ounce but ETFs tracking the precious metal are on track for another year of gains in 2012.
There are many reasons why gold ETFs could do well in 2013, assuming the world doesn’t come to an end Friday when the Mayan calendar terminates. Central banks are continuing their monetary easing programs, Europe’s debt crisis isn’t going away and the U.S. could face fallout over the fiscal cliff.
SPDR Gold Shares (NYSEArca: GLD), the largest gold ETF, has gained 6.6% year-to-date. Gold futures were trading around $1,667 per ounce Wednesday.
“Your more paranoid (or bearish) friends might tell you that these gains … signal a gold market flush with investors seeking to shore up against some kind of apocalyptic [U.S. dollar] disaster,” Nicholas Colas, Chief Market Strategist for ConvergEx Group, wrote in a recent note.
As the fiscal cliff looms, “it’s easy to get sucked into that idea: consumers see an impending threat to their hard-earned money and buy gold to hedge against a myriad of potential policy mistakes. But don’t be so quick to jump on the bandwagon. There are quite a few things about gold that not many of us know – particularly those ‘doomsday preppers.'” [Fiscal Cliff Talks Dominate Gold ETFs]