The Fed just said buy gold ETFs in emerging markets [emergingmoney]
August 24, 2012 Leave a comment
The release of the Fed minutes showed that further quantitative easing — a possible QE3, will likely occur if the economy does not improve. Since the economy doesn’t look like it is improving, traders took this as an indication of likely additional easing, and creating incentives to get into gold ETFs.
Prior to this the Fed had implied there would not be further easing, and as a result gold and gold mining ETFs had not been performing well.
Emerging Money covered the best ways to play emerging markets with gold ETFs previously, as well as India and its gold market relative to emerging markets investing. The commentary from the Fed and the reaction of the markets demands a review of gold ETFs and where they may be headed.
Two of the most most popular gold mining ETFs are the Market Vectors Gold Miners ETF (GDX,quote) and Junior Gold Miners ETFs (GDXJ, quote). GDX averages 14.6 million shares a day and GDXJ about 3.6 million shares per day. GDX is not heavily invested in emerging markets, with the majority of its assets in Canada and a decent amount in Africa (16%) and Latin America (5%). GDXJ has very little emerging market exposure with 4% in Latin America and less than 1% in Asia.
