Gold Stocks Pare Gains, GDX Drops 12.4% in September

Gold stocks pared their gains Friday afternoon, as the Market Vectors Gold Miners ETF (GDX) settled higher by just $0.16, or 0.3% at $55.19 per share. The GDX – comprised of many of the world’s largest gold stocks – had been as high as $56.58 this morning, but relinquished the large majority of its rally as the broader equity markets tumbled.

The Dow Jones Industrial Average (DJIA) extended its losses this afternoon, finishing lower by 240.60 points, or 2.2%, at 10,913.38.  Risk aversion intensified as investors sold stocks, with the CBOE Volatility Index (VIX) rising 10.6% to 42.96.

Despite today’s modest rise in gold stocks, the GDX posted a steep 12.4% loss in September. The decline was particularly disappointing because on September 2 the GDX  finally surpassed its previous all-time high – reached in December 2010 – and thereby confirmed the new record high in the price of gold.

Subsequently on September 9, the gold stocks ETF reached its current all-time high of $66.98 per share. However, the GDX soon-after turned sharply lower amid widespread liquidation in numerous sectors of the financial markets.

With its September swoon, the GDX is now lower by 10.2% year-to-date.  This compares quite unfavorably to the gold price, which has climbed 14.4% in 2011.