Despite lingering geopolitical tensions, gold finished September in dour form with the SPDR Gold Shares (NYSEArca: GLD) sliding 4.8% for the month.
Gold’s September swoon coincided, not surprisingly, with increased strength for the U.S. As GLD and rival gold ETFs tumbled last month, the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) and it is the greenback’s strength that is among the catalysts prompting investors to continue pulling cash from gold ETFs.
“Meanwhile, total known holdings amongst ETF families fell to the lowest level since September 2009 in another sign that the strengthening dollar and fading memory of the financial crisis is stripping gold of its appeal at a hasty clip,” said Interactive Brokers’ Andrew Wilkinson in a note posted by Teresa Rivas of Barron’s.
For the week ended Sept. 30, investors pulled $140.2 million from GLD, the largest physically-backed gold ETF, and $89.5 million from the iShares Gold Trust (NYSEArca: IAU). That brings September outflows from GLD and IAU to $986.2 million and $117.1 million, respectively. [Gold ETF Departures on the Rise]
Making the slack September performances by gold ETFs and the outflows from those funds all the more ominous is the fact that the ninth month of the year is traditionally kind to gold. Over the 20 years prior to 2014, gold had posted a 3% gain in the month of September, nearly double the yellow metal’s average November performance. November is the second-best month for gold prices over the past 20 years. [September Could be Good to Gold ETFs]
For the third quarter, GLD lost $773.8 million while IAU bled $85.5 million.
Gold’s struggles are taking a toll on mining ETFs. Over the past month, four of the nine worst-performing non-leveraged ETFs are funds with exposure to gold or silver mining.
Speaking of silver, in a phenomenon that has been seen during previous periods of gold market stress, investors are sticking by silver ETFs. In fact, holdings at global silver exchange traded products are near record highs. Although it plunged 11.2% last month, the iShares Silver Trust (NYSEArca: SLV) added nearly $339 million in new assets. [The Daring are Buying Silver ETFs]
SPDR Gold Shares
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD.