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Plummeting Precious Metal Prices Cause ETF Withdrawals

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Dollar gains, gold plummets

Global stock markets rose on Wednesday, November 3, as some positive economic data came out from the United States. The trade data were also better than expected, showing the smallest September deficit between imports and exports since 2012. The US dollar surged and reached a three-month high against the euro in the currency market. Erasing all the gains since the past few months, we can see that gold seems to be back to square one, breaking the initial $1,100 support level from August.

Holdings in paper gold like the SPDR Gold Trust (GLD) shrank by almost 3 tonnes on Wednesday. GLD saw a sixth straight day of declines and closed at $105.90 per share. It closed at the lowest level in five weeks at 686 tonnes—less than 3% above late July’s new eight-year lows.

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Other precious metals

Other precious metals, like silver, platinum, and palladium, have been following gold’s trend. Silver hit its lowest price in about a month. Silver fell almost 3.90% on a five-day trailing basis. The iShares Silver Trust (SLV) also followed the losses in silver and fell almost 4.1%. The fund flow in the silver ETF also looked quite similar to gold, as investors’ position in the ETF shrank on Tuesday. Platinum and palladium lost 4.0% and 9.7%, respectively, on a five-day trailing basis.

Mining companies have seen a similar fall in their prices due to the plummeting prices of precious metals, including Alamos Gold (AGI), GoldCorp (GG), and First Majestic Silver (AG). These three stocks together are 9.1% of the VanEck Vectors Gold Miners ETF (GDX). The GDX indicator is downward-defined as precious metal prices sink.

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