As equity prices fall and gold prices head above $1,900 an ounce, the market capitalizations of the two largest exchange traded funds have switched places, with State Street’s SPDR Gold Shares (GLD) overtaking the SPDR S&P 500 (SPY) as the largest ETF in the world.
“Gold surged to a record high $1910 per ounce on Aug. 22, while a steady stream of weak economic reports pushed the S&P 500 down to its lowest in almost a year,” wrote Standard & Poor’s senior financial writer Vaughan Scully in a comment on Tuesday. “As equity prices decline and gold prices rise, the market capitalizations of the two largest exchange traded funds, SPY and GLD, have converged.”
On Aug. 19, the two ETFs crossed paths, with soaring gold prices pushing the net asset value of the gold ETF to $76.7 billion, and a plunging stock market driving the value of the S&P 500 ETF assets down to $74.4 billion, Scully noted.
However, Scully’s colleague, S&P gold equity analyst Leo Larkin, said in a phone interview that the run-up in gold prices may be overplayed in a heated market.
“We like gold stocks. We’re bullish on gold. However, at the current levels, we think gold is probably a little overextended in price,” Larkin said. “We are looking for a pullback. But it doesn’t change our long-term outlook, which is positive, bullish.”