“For investors that are accustomed to buying and selling gold in US dollar terms (a widely used benchmark in other Gold ETFs), GEUR seeks to neutralize US dollar risk,” according to AdvisorShares.
Some observers, though, warn that the shelf life of local-currency-denominated gold bull market may be short lived. For instance, gold in yen has remained relatively flat, even though the Bank of Japan has employed similarly aggressive measures for a much longer period. The AdvisorShares Gartman Gold/Yen ETF (NYSEArca: GYEN) was down 0.5% so far this year.
“Our forex strategists found that the impact of QE on the local currency fades over time,” Commerzbank analyst Carsten Fritsch said in the Economic Times article. “Since ECB QE just started, it will take some time. Note that Japan started its QE programme two years ago. It is therefore plausible that ECB QE will boost gold in euro terms at least until end-2016.”
AdvisorShares Gartman Gold/Euro ETF
For more information on the bullion markets, visit our gold category.
Max Chen contributed to this article.