Investors Are Finally Starting To Pull Money Out Of Gold Funds
There has been some liquidation this week in GLD (SPDR Gold, Expense Ratio 0.40%), where more than $1 billion has left the fund via redemption pressure.
This comes during a brutal month for long gold products on plunging prices in most of the Precious Metal sector on heavy trading volume in funds like GLD. We see GLD trading today at its lowest level since February of this year, having given up all of its gains in between February and say September, when it first began to crater.
The downward spiral has been exacerbated by an inflationary surge in the U.S. Dollar, reference UUP (PowerShares DB U.S. Dollar Index Bullish, Expense Ratio 0.80%) and pressure in other Precious Metals such as Silver (SLV) and Platinum (PALL) for example.
Interestingly, even with the more than $1 billion that has left GLD in recent sessions, the fund still has done quite well year-to-date in terms of attracting new assets, with a net of about $7.5 billion entering it this year via creation flows. Competing fund IAU (iShares Gold, Expense Ratio 0.25%) has also had a decent 2016 in terms of asset gathering, pulling in over $1.7 billion in its own right via creations.
In spite of recent immense price pressure in Gold prices themselves, the bottom line is that for long Gold ETPs, 2016 has been a rather good year, and GLD still stands tall as the largest fund in the segment in terms of AUM with around $29.9 billion, followed by IAU’s $7.1 billion. Another larger player in the space is the $922 million SGOL (ETFS Physical Swiss Gold Shares, Expense Ratio 0.39%), which has attracted more than $128 million itself in new assets year-to-date thanks to new buyers.
As we head into the end of the quarter and the end of the trading year, with Gold itself having given up a huge portion of year-to-date gains (GLD is up 6.49% presently YTD but well off of its summer/fall peak prices) it will be interesting to see if recent outflows like we have seen in GLD specifically continue, or do some look to bargain hunt the long ETFs here at these price levels.
Levered long ETPs here are worth watching in the case of the latter scenario, specifically funds like DGP (DB Gold Double Long ETN, Expense Ratio 0.75%), UGL (ProShares Ultra Gold, Expense Ratio 0.95%), and UGLD (VelocityShares 3X Long Gold ETN, Expense Ratio 1.35%).
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
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