Gold miner stocks and exchange traded funds plunged Thursday with bullion prices after Federal Reserve Chairman Ben Bernanke on Wednesday indicated the Fed may taper its bond purchases. Speculation the Fed could move toward a less dovish stance hammered gold and miner ETFs.
The Market Vectors Gold Miners ETF (NYSEArca: GDX) dropped 6.5% Thursday and the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) plunged 8.5%. GDX has declined 42.9% year-to-date and GDXJ is down 47.8%.
The leveraged-long Direxion Daily Gold Miners Bull 3x Shares (NYSEArca: NUGT) plummeted 21.4% on heavy action, with trading volume at 17.9 million Thursday, compared to a 7.0 million average. Meanwhile, the leveraged-inverse Direxion Daily Gold Miners Bear 3x Shares (NYSEArca: DUST) surged 21.4%.
According to Bloomberg, the Fed will begin tapering quantitative easing to $65 billion a month, beginning September.
The 53-company Standardy & Poor’s/TSX Global Gold Sector Index hit its lowest intra-day price level since October 2008, reports Liezel Hill for Bloomberg.
“The gold producers have just been devastated,” Michael O’Brien, a manager at TD Asset Management Inc., said in the article. “You’ll have a heck of a time having anybody build a new mine or get financing in this environment.”