Things are getting worse, not better for exchange traded funds related to gold. Starting with the usual suspects, the SPDR Gold Shares (NYSEArca: GLD) and the iShares Gold Trust (NYSEArca: IAU) closed at new 52-week lows Friday amid a stellar rally by U.S. stocks after the U.S. Labor Department said employers in the world’s largest economy added 248,000 jobs in September.
Speaking of September, the ninth month of the year is historically kind to gold, but September 2014 was anything but. For the week ended Sept. 30, investors pulled $140.2 million from GLD, the largest physically-backed gold ETF, and $89.5 million from IAU, bringing outflows from GLD and IAU to $986.2 million and $117.1 million, respectively. [Gold ETF Departures on the Rise].
The two ETFs along with equivalent physically-backed rivals flirted with 5% losses last month. Of course, this bad news for miners ETFs. On Friday, the Market Vectors Gold Miners ETF (NYSEArca: GDX), narrowly averted making a new 52-week low as the largest gold miners ETF sank 4.6% on volume that was nearly 73% above the daily average. TheMarket Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) tumbled 7% on volume was that 34.5% above average.
That GDX and GDXJ did not print new 52-week lows on Friday is impressive. Sixty-seven ETFs and ETNs did. Of those 67 ETFs, 34 are plays on precious metals and of those 34, 29 feature some exposure to gold. Still, it cannot be ignored that with Friday’s declines, GDX and GDXJ have again entered bear markets with 90-day declines of 23% and 28.4%, respectively.
In what could be a harbinger of looming weakness for miners, the PHLX Gold/Silver Index (XAU), the oldest index tracking gold and silver miners, lost nearly 4% Friday. On the surface, that closing print looks like a new 52-week low. Further examination reveals XAU closed at a six-year low.
Worse yet, XAU has simultaneously violated 14-year old support created by a rising channel and 12-year horizontal support, notes Chris Kimble of Kimble Charting Solutions.
Violation of such long-term support lines by XAU could portend further weakness for GDX, GDXJ and other bullish miners ETFs.