Have Faith in Yellow Metal: SPDR Gold Trust (ETF) (GLD), Market Vectors Junior Gold Miners ETF (GDXJ), Market Vectors Gold Miners ETF (GDX)

Page 1 of 2

The sixth largest exchange traded fund in the United States, SPDR Gold Trust (ETF) (NYSEARCA:GLD), follows 1/10th of price of one ounce of gold. SPDR Gold Trust (ETF) (NYSEARCA:GLD) is also among the top ten largest holders of gold in the world. As of Feb. 29, the ETF has given a YTD loss of almost 11% to its investors. Talking about other ETFs that follow gold prices, Market Vectors Gold Miners ETF (NYSEARCA:GDX) tracks the price of gold plus the yield performance of NYSE Arca Gold Miners. Due to the recent decline of gold prices, Market Vectors Gold Miners ETF (NYSEARCA:GDX)’s YTD loss stands at almost 48%. On the other hand, the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) follows the price and yield performance of Market Vectors Junior Gold Miners’ index. Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) has yielded a YTD loss of 74% to its investors.

SPDR Gold Trust (ETF) (NYSEARCA:GLD)Now, the million dollar question is what’s in store for these ETFs and gold prices in the coming years? The answer appears to be a complicated one. However, I still remain bullish about this precious metal in the long run—the reasons are discussed below.

Continuation of QE3 Program

The U.S. economy shrunk by 0.1% in 4Q12, which was the first time in more than three and a half years. With the budget deficit hovering around $1 trillion, the odds of Fed discontinuing its QE3 plan looks highly unlikely. However, as costs related to buying more debt from the market keep on increasing, Fed might lower its monthly target of buying $85 billion worth of assets. Otherwise, with no asset buying program on the cards, the U.S. economy could face another economic recession.

With the QE3 program staying, money supply is bound to go up, creating inflation in the long run. With inflation on the cards, people would hedge themselves through gold and fuel its prices.

Fed’s Latest Comments on the U.S. Economy

Federal Reserve’s Chairman, Ben Bernanke has recently defended the low interest rate policies of the central bank. According to the Chairman, the recent bond purchases are essential in lowering the interest rates, which in turn will stimulate growth. Moreover, because of these low interest rates, people have been able to get auto loans and mortgages at cheaper costs. The chairman didn’t give any indication about discontinuing the QE3 program.

Emerging Markets

As the world’s major countries battle with the economic downturn, the developing countries are bound to get affected. During the past few years, hedging with gold during the economic downturn has been the norm in most of the emerging economies. In the future as well, people in these economies would continue to hold significant amount of gold in their portfolio, driving the gold prices up.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!