Precious Metals ETFs Get Thumped

The sinking of precious metals exchange-traded funds in August drove home to investors the perils of jumping into the latest fad. Investors who piled into precious metals ETFs during the summer commodity buildup found their treasure hunting to be an unprofitable pastime in August.

At the bottom of ETF performance for the month were the 10 precious metals funds in the accompanying table. The dismal performance of these "store-of-value" vehicles brings into question the strength of the "flation" part of the currently fashionable "stagflation" forecasts, which means a period of rising prices together with a decline in business activity.

During the summer, these funds were touted as refuges from inflation. But as the U.S. dollar strengthened in August, precious metals prices fell. ...