Gold ETFs Hit Hard By US Dollar (GLD, IAU, SGOL, GDX)

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Gold and Gold ETFs were hit hard today as the US Dollars rose

Gold and Gold ETFs including the SPDR Gold Shares Trust ETF (NYSEARCA:GLD), the iShares Gold Trust ETF (NYSEARCA:IAU), the ETFS Gold Trust ETF (NYSEARCA:SGOL), and the Market Vectors Gold Miners ETF (NYSEARCA:GDX), all dropped more than .25% today against a strong US dollar.  Despite continued Greek default woes and continued European drama, the gold spot price plunged .9% to close at $1724.90 per ounce.

Gold prices and gold ETFs likely dropped today due to investors’ demands for US Dollars as a backstop against the ailing Euro dollar.  Greece has yet to accept a deficit reduction and write down deal in return for an EU bailout; if a deal is not reached Greece will likely default in March, which would likely destroy the value of the Euro dollar.  Typically, investors flee to gold and silver as “safe havens” towards currency failure, however today the US Dollar was the safe haven of choice against a potential Euro dollar collapse.  Since gold prices typically move opposite to US Dollars, it is not surprising that gold prices dropped as the US dollars rose today.

Gold ETF Summary:

1. SPDR Gold Trust ETF (NSYEARCA:GLD): -0.48 (-0.29%)
2. iShares Gold Trust ETF (NYSEARCA:IAU): -0.05 (-0.30%)
3. ETFS Gold Trust ETF (NYSEARCA:SGOL): -0.47 (-0.27%)
4. Market Vectors Gold Miners ETF (NYSEARCA:GDX): -0.26 (-0.46%)

Bottom Line: Gold and gold ETFs typically rise when currencies such as the US Dollar or Euro dollar go down as gold is seen as a “safe haven” currency and inflation hedge against paper currencies.  US Dollars also typically go up if the Euro dollar appears to be in jeopardy.  As of now nobody knows if Greece will indeed default or somehow manage to accept the conditions of their potential bailout package.  Despite gold’s drop in price today however, gold and gold ETFs will likely rise if Europe continues to heat up and scare investors away from traditional government currencies.

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Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.