After soaring higher on Monday, equity markets finished the daily slightly lower, with the Dow and the S&P 500 both retreating by 0.34%. Despite a flat market, one asset saw its price almost hit another record high: gold. The precious metal finished the day at $1,220/oz., up close to $20 on the day. Many cited the lack of faith in fiat money as the main reason for gold’s steady rise over the past few weeks. Gold is “really being looked at as an alternative currency right now,” said Nicholas Brooks, head of research and investment strategy at ETF Securities.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, slid 1.27 points, or 0.1%, to close at 1,042.82. Aggregate volume once again topped 1 billion shares, suggesting that investors remain very active.
One of the biggest gainers in the ETFdb 60 was the Market Vectors Gold Miners ETF (GDX) which finished the day up by close to 5.9%. This came on the back of gold coming within $1.10 of its intraday high, which it set on December 3rd at $1,226.40/oz. “The rise reflects doubts about whether fringe euro-zone economies can reduce debt as well as lingering concerns about a possible contagion,” said Ross Norman, a gold trader at TheBullionDesk.com. GDX has been a major beneficiary of the recent crisis, its shares have surged higher by close to 10.3% over the past month (see more information about GDX’s return).
One of the biggest losers on the day was the iShares MSCI Brazil Index Fund (EWZ), which sank by 2.5% in Tuesday trading. This was largely due to the high allocation of the fund towards financials (25.1%) and the weakness that these securities exhibited in today’s trading. Additionally, a weaker price for oil hurt the other top allocations of the fund such as Petroleo Brasileiro which sank by 2% in today’s trading. Oil fell by close to 1.2% (see more of EWZ’s holdings).
Disclosure: Eric is long EWZ