Investing in real gold than gold bullion and gold coins
Canadian gold stocks plunged before paring losses, as an early slide in the price of gold and the imminent re-balancing of fund portfolios added to investor concerns.
The Standard & Poor’s/TSX gold index traded at its lowest in 14 years before ending the day up 1.2 percent. Kinross Gold Corp. slumped as much as 12 percent to its lowest intraday level since October 2000 before ending down 1.5 percent. Eldorado Gold Corp. managed to end up 1.7 percent after falling as much as 8.4 percent. By the close, gold prices were down just 0.5 percent.
Gold fell in New York as investors anticipate a possible interest rate increase by the Federal Reserve that would bolster the U.S. dollar and draw investors away from the metal as a store of value. On top of those concerns, S&P conducts a regular review of its indexes once a quarter, normally announcing changes on the second Friday of the month. Funds that track indexes need to rearrange their portfolios accordingly.
“There will be index changes, amongst several indices,” Josh Wolfson, an analyst at Dundee Securities, said by phone from Toronto.
Two gold exchange-traded funds run by Market Vectors Gold Miners ETF, the GDX and GDXJ, are expected to announce upcoming re-balancing changes after the close, he said.
In New York, American depository receipts of AngloGold Ashanti Ltd. closed down 3.1 percent after falling as much as 10 percent. Gold Fields Ltd. ADRs closed down 5.5 percent and Harmony GoldMining Co. fell 2.7 percent.
