Yet over the past month, investors have generally shunned currency ETFs and rushed into precious metals ETFs, which have seen $3 billion of new money added, according to ConvergEx. Over $2 billion of that total has flooded into SPDR Gold Shares (NYSEArca: GLD and iShares Gold Trust (NYSEArca: IAU). Gold ETFs are trading near record highs. [Debt Uncertainty Drives Investors to Gold ETFs]
Meanwhile, investors have added only $60.6 million of new capital to currency ETFs over the past four weeks.
“The reason seems clear: at some point (and between the Greek crisis and U.S. debt limit debate we’ve reached it) investors do not consider most currencies as a safe haven,” Colas wrote. “I assume this will unwind once the debt limit debate has come to some conclusion. But for now, it’s a ‘risk off’ world, and that seems to include most of the ‘safest safe haven’ currencies.”
Full disclosure: Tom Lydon’s clients own GLD.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.