Spot Gold (GLD) Steadies But Gold Miners (GDX) Still Heading Lower
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Market Vectors Gold Miners ETF (NYSE: GDX) is trading lower by .75 percent intra-day, while SPDR Gold Shares (NYSE: GLD), which tracks the spot price of gold, traded flat.
The divergence is an ominous sign for gold, as miners have been a favorite choice for smart money traders since returns in the miners have lagged the spot. At the time the trade become popular, there was a belief that the spread between GDX and GLD would favor GDX. So far, the theory hasn't held water. GDX is down 8 percent in three months compared to GLD's slide of 4.75 percent. On a 5 day chart, gold is down 3.4 percent and GDX is down 4.57 percent. Well, so much for that theory.
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The divergence is an ominous sign for gold, as miners have been a favorite choice for smart money traders since returns in the miners have lagged the spot. At the time the trade become popular, there was a belief that the spread between GDX and GLD would favor GDX. So far, the theory hasn't held water. GDX is down 8 percent in three months compared to GLD's slide of 4.75 percent. On a 5 day chart, gold is down 3.4 percent and GDX is down 4.57 percent. Well, so much for that theory.
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