Daily ETF Roundup: VGK Capsizes, GDX Spikes

by on November 30, 2010 | ETFs Mentioned:

Markets continued their down streak to close out the final day of November, spurred by widening fears of another Euro-zone debt crisis, which seem to be re-emerging again, after wreaking havoc on the currency bloc earlier this year. The Dow finished down 0.42% while the Nasdaq and S&P 500 lost 1.07% and 0.61%, respectively. Oil prices gave back the strong gains from yesterday, losing over $2/barrel. Gold jumped up $20/ounce, marking one of the positive performers from today’s market. Looking back on the last four weeks, all three major indexes (Dow, Nasdaq, S&P 500) finished November down about one percent. On the other hand, oil gained 3.2%, gold 2.1%, and silver an astonishing 15% for the month [see also Inflation-Fighting ETFs Back In Focus].

Today’s biggest news came from China, as the nation moved to invest further in the surging precious metal, gold. China also approved a fund that will invest in gold exchange-traded funds outside of their borders, allowing domestic investors the opportunity to hedge against the white-hot inflation that the country is enduring. China is the world’s largest producer of gold, and the second largest consumer, as the nation has moved to add more to their reserves in recent years. Aside from this, the European debt worries continued to weigh on markets, as it would appear that Portugal will soon be in line to need a bailout. The S&P will be reviewing Portugal’s debt ratings in the coming weeks, which could lead to a downgrade. With Greece and now Ireland already receiving bailouts, many leaders from around the world have differing opinions on how to deal with this matter [see also Why The European Bailout Is Just Postponing The Inevitable].

One of the biggest ETF losers on the day was the Vanguard European ETF (VGK), which surrendered 1.6% in Tuesday’s trading. VGK allocates its assets to a number of fiscally strong European nations such as Germany and Switzerland, with neither Portugal nor Greece accounting for more than 1% in the fund. Still, worries over yet another European debt crisis has weighed on the euro-zone as a whole, as the EU and IMF will now be forced to discuss another bailout for Portugal, all while monitoring how their investment in the battered Ireland plays out. VGK has endured a rough November, losing over 7% on the month [see VGK's fundamentals here].

One of the biggest ETF gainers was the Market Vectors TR Gold Miners Fund (GDX), which gained 1.5% on the day. The fund’s gains can be attributed to the news from China, as the nation encourages its domestic investors to allocate to the shiny commodity through ETFs. But the surge could also be a result of the worsening situation overseas. As equities continue their slippery slope, investors may see gold as a safe haven until markets can reverse their current trend [see GDX's holdings here].

Disclosure: No positions at time of writing.