ETF Update

Precious Metal Funds Fall as Much as 13%

Stock quotes in this article: MEE , FCX , X , AA , RTP , CDE , HL , XME  

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The average precious metal fund slumped 7.4% this week as commodities swooned.

Gold slipped another 2.2% as the U.S. dollar index strengthened by 1.5% against major currencies. Silver dropped 7.8%, and platinum shed 4.8% of its value. All performances were measured in the week ending June 18.

TheStreet.com Ratings

The worst-performing precious metal fund was the Vanguard Precious Metals and Mining Fund(VGPMX Quote), plunging 13% on declines of 21% in Centerra Gold(CAGDF Quote), 19% in Eramet and 18% in Lonmin(LNMIY Quote). Centerra is attempting to get its suspended Mongolian operating licenses reinstated. Lonmin's platinum sales are expected to fall short of estimates for its current fiscal year after a South African furnace had to be shut down to repair a leak.

The second-worst performer, SPDR Metals & Mining ETF(XME Quote), collapsed 12%. Weakness in copper prices dissolved 16% of shareholder value in Freeport-McMoRan Copper & Gold(FCX Quote).

An oversupply of aluminum, up 86% to a record 4.32 million tons in warehouse stockpiles over the past year, dented Alcoa shares by 12%. United States Steel Corp. lost 12% as it renegotiated its debt to a higher interest rate. And the SPDR's holding that descended the most was coal miner Massey Energy(MEE Quote), down 23%.

Looking at more of a pure play on precious metals, the Oppenheimer Gold & Special Minerals Fund(OPGSX Quote) was decimated by 10% on losses of 25% in Rio Tinto(RTP Quote), 21% in Coeur d'Alene Mines(CDE Quote) and 21% in Hecla Mining(HL Quote).

Worst-Performing Precious Metal Funds
Fund (Ticker) Rating
Fund Type
Total Return 1 Week
Vanguard Precious Metals and Mining Fund (VGPMX) C+
Open-End
-12.88%
SPDR S&P Metals & Mining ETF (XME) B
ETF
-11.86%
ProFunds Precious Metals UltraSector ProFund (PMPIX) C
Open-End
-11.52%
Oppenheimer Gold & Special Minerals Fund (OPGSX) C+
Open-End
-10.22%
Midas Fund (MIDSX) C
Open-End
-10.07%
Rydex Series - Precious Metals Fund (RYPMX) C+
Open-End
-10.02%
Emerging Global Shares DJ EM Metals & Mining Titans (EMT) U
ETF
-9.90%
PowerShares Global Gold and Precious Metals Portfolio (PSAU) U
ETF
-9.78%
RiverSource Precious Metals and Mining Fund (INPMX) C+
Open-End
-9.71%
USAA Precious Metals and Minerals Fund (USAGX) B-
Open-End
-9.48%
Source: TheStreet.com Ratings, Bloomberg

While no precious metal funds reported a positive total return for the period under review, gold is still in a long-term uptrend. The European Union removing fiscal stimulus sooner than the U.S. may strengthen the euro versus the U.S. dollar. This may spur the next move in gold and other precious metals.

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