Highlighted by Thursday’s action, excitement is rising for precious metals exchange traded funds, including both the physically-backed and equity-based varieties.
The SPDR Gold Shares (NYSEArca: GLD), the largest gold ETF by assets, jumped 3.5% on volume that was roughly three and a half times the daily average. Thursday turned out to be GLD’s fourteenth-best one-day performance, as Barron’s reports. That is no small feat considering the bullion-backed fund turns 10 in November.
Silver ETFs took part in the fun with the iShares Silver Trust (NYSEArca: SLV) and the ETFS Physical Silver Shares (NYSEArca: SIVR) gaining an average of 4.5%. Volume was jaw-dropping across those ETFs as well with SIVR rising on turnover that was more than five times the daily average. SLV’s volume was nearly quadruple the three-month daily average. [Silver Shows Signs of a Big Rally]
Technical momentum has been building in these ETFs and others with some trading desks and liquidity providers catching the moves early on.
“From a capital markets/ETF standpoint, today’s astounding volume in GLD, SLV (both trading greater than 3X normal volume) is not entirely surprising because we have pointed out technical momentum in Gold the metal itself dating back to early June and the accumulation of upside (now in the money) calls in GLD. When technicals and institutional options activity lean the same way, we pay attention not only for the next few days, but for the next few weeks and months unless the trend is disrupted somehow,” Street One Financial Vice President Paul Weisbruch told ETF Trends.
In a note out earlier this month, Street One highlighted upside call buying n GLD and increased volume in leveraged products such as the PowerShares DB Gold Double Long ETN (NYSEArca: DGP) and the ProShares Ultra Gold (NYSEArca: UGL). [Gold ETFs Look for Support]
Since the note was published on June 2nd, GLD is up 6% while DGP is higher by almost 12%.
Weisbruch notes inflows to gold ETFs remain subdued, but it could just be a matter of time before that changes.
“The only missing piece thus far is massive inflows in any of the aforementioned products, as we simply have not yet seen larger creation activity that typically accompanies gigantic volume swells (and price surges) like we are seeing today, but we underscore the word ‘yet,’ he said.
From June 2nd through June 18th, GLD lost about $100 million while investors pulled nearly $13 million from SLV. [Investors Stick With Silver ETFs]
SPDR Gold Shares
Tom Lydon’s clients own shares of GLD and SLV.