Gold ETFs continued to rise Wednesday morning in the wake of President Barack Obama’s election victory as traders positioned for more quantitative easing from the Federal Reserve.
The precious metal’s price spiked back above $1,700 an ounce on Tuesday. “If Obama is reelected, that would be a boost for gold because it means continuity on U.S. public spending and Federal Reserve monetary policy,” said Nicolas Berge, a trader at hedge fund Absolute Capital Group, in a Reuters report. [Gold ETFs Surge Above $1,700 as Voters Hit Polls]
Mitt Romney had indicated he would fire Fed chief Ben Bernanke if elected president.
Recent gold exchange traded fund flows indicate that investors are still bullish towards the metal. There are a number of catalysts remaining within the economy today that support an investment in gold, particularly with an ETF. Also, Europe’s debt crisis isn’t going away anytime soon.
“So have you missed the boat on gold? Perhaps not. Some compelling drivers remain, including the pending fiscal cliff and the Federal Reserve’s ‘unlimited’ quantitative easing program, which could mean higher inflation across the world,” Tom Taulli wrote for InvestorPlace. [Eight ETFs for Gold Exposure]
Gold is recovering following a pullback that started in early October, reports Trang Ho for Investor’s Business Daily. SPDR Gold Shares (NYSEArca: GLD) gained about 2% on Tuesday and the fund had brushed its 200 day-moving-average last week. This is the largest gold-holding ETF, with $72 billion in assets and an expense ratio of 0.40%. The physically-backed ETF has made owning gold accessible and burden-free for precious metals investors. [Central Banks will Devalue Currencies, Gold ETF Bulls Say]
The Market Vectors Gold Miners ETF (NYSEArca: GDX) is another way to play gold. The fund focuses on U.S. listed companies that are involved with the mining and exploration of the metal. GDX has posted a small gain of 1.13% year-to-date, gaining 22% from August through November. GDX has roughly $10.25 billion in assets, so it’s able to afford a low expense ratio of 0.52%. Another option for those that want a small-cap focused play is the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ). This fund focuses more on the exploration aspect, and has gained 26% from August through November. [Gold ETFs Eye 2011 High on Central Bank Stimulus]
Another force driving gold demand is the festive season in countries such as India and China. Jewelry and coin sales are robust at this time, and sales are expected to jump 35%, and 45%, respectively. The drop off in gold prices last week is encouraging for jewelry buyers, and in turn, investors, reports Rutam Vora for Business Standard.