This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Precious Metals Funds Flop This Week

For more coverage from Ratings team, check out Ratings section.

For the five trading days ending Thursday, Oct. 16, the average precious metals fund we track shed 17.0% of its value on an 11.9% drop in the price of gold to $804.60 an ounce.

IAMGold (IAG - Get Report) CEO Joe Conway may be predicting $1,000 gold before year-end due to "massive financial market turmoil" and "significant monetary inflation," but the yellow metal is not cooperating.

The problem with the monetary inflation argument is that, even though banks may have money to lend, as we head into a recession there are fewer good credit risk companies and individuals trusted by these institutions to which they can make loans. Also, the Reuters/Jefferies CRB Commodity Price Index is off about 40% since the end of June, which shows a decline in raw material costs.

The "lack of jewelry demand" was cited by John Reade, the head of Metals Strategies for UBS (UBS), as a reason for the downward pressure on the price of gold. In the largest drop on record, Friday's University of Michigan Survey of Consumer Confidence fell to 57.5 from 70.3 in September. In a recession, struggling consumers, shell-shocked from stock market losses, may be shunning gold jewelry in advance of the prewinter holiday shopping season.

The worst-performing precious metals fund this week is the ProFunds Precious Metals UltraSector ProFund (PMPIX), which dove 32.60% on 150% leverage to the Dow Jones Precious Metals Index. This index follows U.S. stocks of companies that explore for and extract gold, silver and platinum ore.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
ABX $11.14 0.00%
AEM $28.00 0.00%
GDX $18.47 0.00%
GG $18.19 0.00%
IAG $1.88 0.00%


DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs