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.
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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