Dow Soars While Investors Leave Gold ETFs

After the Dow Jones Industrial Average’s (^DJI) record one-day point gain today, though, gold exchange traded funds (ETFs) might be losing some of their luster as a safe haven. Gold lost $2 in trading today, reports Dow Jones Newswires.

The Dow soared 936 points after the world’s major governments pulled together to support the global banking system, reports Tim Paradis for the Associated Press. All of the major indexes gained more than 11%. Trading was so active that prices were still being computed several minutes after the closing bell.

While investors and analysts alike are stunned by the gains, no one is saying the markets have hit a bottom. It’s more likely that more back-and-forth trading will be seen in the coming days and weeks.

Oil today jumped $4 on the rally to close at $77.46 a barrel. Goldman Sachs has become a near-term bear on the commodity, saying that continuing financial turmoil will continue to weigh on demand.

Last week witnessed investors heading for the exits in equities and mining for safe-havens such as gold and precious metal ETFs - and even shoe boxes.

Equity funds saw outflows up to $9.4 billion, not including ETFs, the fifteenth straight week of outflows, while ETFs took in $4.17 billion, reports Tom Sullivan for Barron’s. The diversification and the ability to short sell an ETF are just part of the attraction to these funds.

Many have been so worried about the state of their banks and the overall economy that pulling money out of an account and sticking it in a shoebox hasn’t been unheard of. Gold-focused ETFs may be a better bet for these weary investors looking for some safety.

• SPDR Gold Shares (GLD), up 7.5% year-to-date (black line)
• PowerShares DB Gold (DGL), down 2.1% year-to-date (green line)

Posted in Categories: Commodities, Contributor, ETFs, External Research, Stocks, USA.

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