Fans of the Chicago Cubs frequently find themselves saying “There’s always next year.” If gold exchange traded funds could express emotions, the sentiments for 2014 would likely be the same as those of Cubs fans.
On the surface, the year-to-date loss of 2.9% for the SPDR Gold Shares (NYSEArca: GLD) does not look that bad, but over the past six months, GLD and rival gold ETFs the iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) are sporting losses north of 11%.
Many investors are not sticking around to find out what comes next for gold ETFs. GLD’s gold holdings on Tuesday slid to “712.9 metric tons, the biggest drop since June 2013. Assets declined to the smallest since September 2008,” report Millie Munshi and Phoebe Sedgman for Bloomberg.
In the fourth quarter, GLD, the world’s largest physically-backed gold ETF, has bled $1.7 billion in assets while IAU and SGOL have lost almost $67 million combined as slumping oil prices have prompted investors to ratchet back inflation expectations, diminishing the allure of inflation-fighting gold in the process. [Gold ETFs Lose Inflation Hedge Status]
Year-to-date, GLD has lost over $2.7 billion in assets, a total exceeded by just three other ETFs. The value of GLD’s assets “has dropped 13 percent to about $27 billion this year after slumping 57 percent in 2013,” according to Bloomberg.
Gold ETFs have also been stymied by the rise of the U.S. dollar, a theme that could again be prominent in 2015, particularly if the Federal Reserve raises interest rates.