Gold exchange traded funds are losing their luster and the 12-year gold fever induced rally finally buckles as investors shift away from the safe-haven asset.
The SPDR Gold Shares (NYSEArca: GLD) has declined 18.7% year-to-date. The fund is the least popular ETF on the U.S. market this year, with asset outflows of $20.5 billion, according to IndexUniverse data.
After peaking at $1,921.15 per ounce on September 2011, investors have been losing interest in gold, with prices falling to as little as $1,180.50 in June before rebounding to its current $1,370 levels, Bloomberg reports. [No Gold, No Problem for This Combo Metals ETF]
“The gigantic, decade-long rally I don’t think will be repeated, at least in my lifetime,” Michael Aronstein, 60, president of Marketfield Asset Management LLC, said in the article.
Traders have been turning away from gold in the current “risk-on” environment as the S&P and Dow Jones Industrial Average broke above new highs.
“The foundation for gold has eroded,” Edward Lashinski, director of global strategy for futures trading at RBC Capital Markets LLC, said in the article. “Capital can be deployed much more effectively in other enterprises that actually see a return.”
Notable gold billionaire investor Paulson has also been cutting back on gold. Paulson & Co. held 10.2 million shares of SPDR Gold Shares at the end of the second quarter compared with 21.8 million shares at the end of the first quarter, according to a 13F filing with the Securities and Exchange Commission released Wednesday. [Paulson Slashes GLD Stake]
Additionally, since the September 2011 peak in gold prices, global gold mining companies, which had a market cap of $486 billion, have lost $271 billion.