Perhaps ironically, metals ETFs, resources-based stock ETFs and resources-based country ETFs all received a much-needed boost on Thursday, August 8, 2013. The reason? Chinese imports had surged nearly 11% from a year earlier. Stabilizing and/or improving demand from one of the world’s fastest growing economies is certainly capable of sending commodities skyward and resources-related stocks rocketing.
So here are several questions for the gold bugs as well as the naysayers. If the world economy were actually stabilizing — even improving — would a Gold ETF be more desirable or less desirable? Economic growth often coincides with inflation. And while gold will never be as “useful” as silver, platinum, copper or palladium, the Chinese have always coveted the shiny metal. What if the world economy continues to deteriorate, in spite of green shoots or a few positive data points? Economic uncertainty as well as unprecedented levels of monetary stimulus used to encourage inflows into Gold ETFs. And while gold has been moving in lock-step with industrial metals for a year or more, history has often treated precious metals differently.
Gary Gordon is president of Pacific Park Financial, Inc.