ETF Trends
ETF Trends

Gold investors have found the Midas touch with gold and related exchange traded funds (ETFs) showing a small surge.

Gold Cartel. “Gold bugs” have conventionally believed that gold prices were driven by increases in money supply. But recently, gold bugs claim that the U.S. authorities, along with private interests, have furtively meddled with gold for years. They have dubbed this “The Gold Cartel.” Gold bugs may ponder why gold is flirting at $900 per ounce, yet remains 10% off March highs, says Scott Patterson and Liam Denning for The Wall Street Journal.

The recent high gold open interest, increases in volume of contracts, have the gold bugs thinking a new factor, The Gold Cartel, reacted to keep the sudden surge in gold prices from climbing even higher.

Where Is Gold Going? But gold is still experiencing safe-haven buying, and the trend is likely to continue, writes John Reade, head of metals strategy at UBS, for Financial Times. He has cited the shaky confidence in the banking sector has left investors demanding gold coins and small investment bars. The short-term forecasts for gold are set to be $900 an ounce in one month and $850 in three months.

What drives demand? Surprisingly, three fourths of gold demand is driven by jewelry demand, says Patterson, so the fact that Indian brides are timid to buy gold after it passes $750 per ounce is relevant. It is important to note that institutional speculators within the gold futures market have retreated since last Summer, as hedge funds have bombed.

  • SPDR Gold Shares (GLD): up 7.0% in the last week, up 7.1% in the last month

ETF GLD

  • iShares COMEX Gold Trust (IAU): up 6.9% in the last week, up 7.0% in the last month

ETF IAU

  • PowerShares DB Gold (DGL): up 7.1% in the last week, up 7.5% in the last month

ETF DGL performance

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.