Gold miner exchange traded funds are among the top ETF performers this week, getting a boost from higher precious metal prices following the Federal Reserve’s decision to extend its low-rate pledge out to late 2014.
Market Vectors Gold Miners (NYSEArca: GDX) and Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) are on track to post gains of more than 8% for the week. The ETFs are also testing their 200-day exponential moving averages. [Gold Miner ETFs Soar After Fed’s Low-Rate Pledge]
Global X Silver Miners (NYSEArca: SIL) is up about 7% this week.
The ETFs invest in miner stocks rather than bullion or precious metal futures.
Gold prices have climbed above $1,730 an ounce with the Fed signaling continued easy monetary policy and expectations the central bank could engage in further quantitative easing.
“It is difficult to ignore the long-term inflationary impact of the recent dramatic increase of our monetary base. The Fed will eventually be forced to put on the brakes and mop up this liquidity through higher interest rates, but it isn’t the most pressing concern,” Morningstar analyst Abraham Bailin writes in a profile of Market Vectors Gold Miners.
“The Fed has no choice but to do all it can to preserve stability of our financial markets and worry later about the consequences of its policy,” the analyst said. “By pushing broad antideflationary monetary policy, the Fed introduced vulnerability to dollar debasement in addition to longer-term inflationary pressures.”
Market Vectors Gold Miners
Full disclosure: Tom Lydon’s clients own GLD.