Why Investors Have Stopped Pouring Money into Precious Metals
Gold-based funds
The precious metals have been on a southward journey in the last couple of days. The fall of the precious metals has likely been due to the diminishing safe-haven appeal of the bullions. Initially, investors were likely sticking to gold as most of the other assets in the economy were underperforming. However, the recent fall in the bullions has curbed the fund flows in gold. The SPDR Gold Shares ETF (GLD) had seen remarkable fund infows since the begining of 2016. However, the consistent inflows turned into outflows as the metal started to fall.
As gold has risen 16.2% YTD (year-to-date), GLD has also climbed 14.5%. The iShares Gold Trust (IAU) is another prominent gold-based fund that takes its price changes from gold. IAU has climbed 14.6% on a YTD basis.
The assets of the fund fell 0.29% to 815.7 tons on Monday, April 4. Last week, the fund experienced its first net weekly outflow in 2016. In March, the flows in this fund had climbed to their highest level in the past two years.
Mining funds and stocks
The disappointment in the precious metal market has led to the fall of mining-based funds, as well. Funds that have fallen over the last week include the Global X Silver Miners ETF (SIL) and the SPDR S&P Metals and Mining ETF (XME). These two funds have fallen 1.4% and 0.55%, respectively, on a trailing-five-day basis.
Precious metal shares that have fallen over the last week include Silver Wheaton (SLW), Randgold Resources (GOLD), and Harmony Gold (HMY). These three companies have fallen 8.7%, 1.8%, and 3.5%, respectively. These stocks together make up 0.6% of the Market Vectors Gold Miners ETF (GDX).
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