Two ETFs that surfaced on our radar recently that are likely not readily recognizable to everyone, including most model managers we will bet, are GEUR (AdvisorShares Gartman Gold/Euro ETF Expense Ratio 0.65%) and GYEN (AdvisorShares Gartman Gold/Yen ETF, Expense Ratio 0.65%). Both of these funds debuted earlier this year, back in February, and although AUM levels in these remain small (about $2.2 million and $3.8 million respectively), we have seen periods of volume spurts in both.
Activity may pick up even more so if trading interest in Gold and Gold linked ETFs continue to expand as it has, during the recent slide in Gold prices. GEUR by design according to fund literature seeks to
“provide positive returns by utilizing the European Union’s Euro to invest its assets in the gold market.
GEUR offers investors an alternative method to invest in gold by financing gold purchases in liquid currencies other than the U.S. dollar. Euros are obtained through the sales of either exchange-traded currency futures of OTC foreign exchange forward contracts.”
And GYEN as you might imagine, is structured the same way just with the gold being financed with Yen. How have these strategies held up since inception? Even a casual observer will note that the Euro and Yen have been absolutely hammered since the February inception of GEUR and GYEN and Gold’s recent tailspin and trading at multi-year lows has caught even the biggest Gold Bulls in the marketplace off guard.
With the Gold sell-off the U.S. Dollar has eclipsed multi-year highs in no time flat, as evidenced in recent action in UUP (PowerShares U.S. Dollar Index Bullish, Expense Ratio 0.80%). Thus, both GEUR and GYEN have notably relatively out-performed Gold itself, which conceptually against the backdrop of a rising U.S. Dollar (and falling Euro and Yen) and falling Gold prices makes a lot of sense.
In this case compared against GLD (SPDR Gold Trust, Expense Ratio 0.40%) as the Gold performance since these funds debuted, much less damage has been done to long holders than holding Gold purchased with U.S. dollars. Being newer funds, one can expect that daily trading volume may or may not be existent in size, but we think that portfolio managers will be impressed with tighter visual spreads that we typically see in both funds as well as displayed liquidity levels.
By the same stroke, we have seen some stranger prints on short term charts in both funds as well, separated from NAV by a statistically significant margin, which we can only explain as perhaps careless market orders sent in from somewhere and gobbled up by the market at some unrealistic level causing artificial highs/lows.
AdvisorShares Gartman Gold/Euro ETF
