This year has proven to be somewhatof a difficult year for gold, as this precious metal has struggled to maintain its footing amidst global economic uncertainty. It seems as though eurozone turmoil and adisappointinglyslow road to recovery for the United States has become commonplace in today's market. Nearly everyday, investors are bombarded with headlines from around the globe, shedding light on the latest sour economic reports and the fragility of the global financial market. Although gold is often coveted as a safe haven investment during hard times, the precious metal seems to have lost its way so far in 2012 . In general, gold is the top choice for safe haven investments since historically the asset has exhibited a negative correlation to the stock market: when the equities market takes a tumble and economic uncertainty is high, investors often shift their assets towards the safer and reliable yellow metal. In 2011 this theory held true, as gold featured a correlation of -0.64 to the S&P 500. But as the chart below depicts, this year investors have witnessed a new phenomenon in the gold market.

Currently, gold is exhibiting a 0.13 correlation to the S&P 500, making many investors question whether or not the precious metal is really a safe haven asset. Despite this unusual behavior, some Gold ETFs have managed to post modest gains amidst this year's volatile environment.

Commodity Gold ETFs in First Place

Both physically-backed and futures-based gold ETFs have proven to a be a bright spot so far in 2012, with each fund landing in positive territory on their year-to-date returns. Because these commodity ETPs invest in either physical bullion or futures contracts on gold, they generally reflect the spot price or the underlying contract on gold. And with gold prices kicking off the year with a strong start, several of these products have performed quite well:

  • DB Gold Double Long ETN (DGP): 4.41%
  • COMEX Gold Trust (IAU): 3.87%
  • Ultra Gold (UGL): 3.72%
  • Physical Swiss Gold Shares (SGOL): 3.65%
  • SPDR Gold Trust (GLD): 3.65%
Year-to-date earnings as of July 30, 2012

Explorers and Miners Left in the Dust

Gold explorers and miners, however, have fallen on hard times this year, as rising production and operating costs continue to hammer the industry. Recently, the world's largest gold producer, Barrick Gold Corp. (ABX), posted relatively poor second-quarter earnings, citing that the drop in profits was largely due to the fact that average costs of producing an ounce of gold have ballooned, as have capital costs. And although gold prices have fared well, the uptick in the precious metal has not been able to compensate for gold miners' and explorer's rising costs:

  • Daily Gold Miners Bull 3x Shares (NUGT): -51.15%
  • Global X Gold Explorers ETF (GLDX): -28.19%
  • Market Vectors Junior Gold Miners (GDXJ): -20.45%
  • Market Vectors TR Gold Miners (GDX): -16.14%
  • Global Gold and Precious Metals Portfolio (PSAU): -15.56%

Year-to-date earnings as of July 30, 2012

Follow me on Twitter@DPylypczak

Disclosure: No positions at time of writing.

Related Articles
  1. Budgeting

    Trunk Club Review: Is It Worth It?

    Take a close look at one of the best-known online clothing services in the country, and determine whether it's a good fit for your style and budget.
  2. Budgeting

    HelloFresh Review: Is It Worth It?

    Discover one of the world's most successful meal subscription services, and learn more about how the service operates and what it costs.
  3. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  4. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  5. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  6. Budgeting

    Just the Right Book Review: Is It Worth It?

    Take an in-depth look at Just the Right Book, a subscription service that delivers personalized book selections based on your reading history and preferences.
  7. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  8. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  9. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  10. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center