Gold ETFs Lose Their Glitter

In the article Gold ETFs Aren’t Glittering Despite Turmoil, Smart Money columnist Dan Burrows points out that gold ETFs are well off of their March highs and are even being outperformed by the stocks of discounters like Wal-Mart (WMT) and Family Dollar (FDO).

The puzzle comes from the fact that central banks around the world are pumping liquidity into the financial system – an act that would normally create the threat of inflation and cause the price of gold to rise.

However, the massive deleveraging that has hit stocks is also affecting gold. Liquidation by hedge funds has brought down commodity prices as well as stock prices according to the article.

Gold ETFs include SPDR Gold Shares (GLD), the COMEX Gold Trust (IAU) and the Market Vectors Gold Miners ETF (GDX).

ETFs where WalMart represents more than 10% of holdings include the PowerShares FTSE RAFI Consumer Services Sector Portfolio (PRFS), the Consumer Staples Select Sector SPDR Fund (XLP), and the Dow Jones U.S. Consumer Services Sector Index Fund (IYC).

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