Why buy GDXJ over GDX?
While GDXJ may have some upside potential over GDX if several junior miners strike it big and/or are acquired, there is a trremendous amount of risk with them as many of them will not find gold and will fail.
Miners in GDX, however, are established and can survice if some of their new investments do not succeed. GDX also clearly has an advantage over GLD in terms of its leverage as well.
All constructive opinions are welcome!
Sorry to be making another entry I will be brief. I just ran across this article and thought I would pass the link along to this board. It might help to make a decision on whether to buy any etf that reps physical gold or miners!
Please forgive, but the second part of that link is the operational link. The first part http://us.rd.yahoo.com/finance/external/tsmfe/SIG=134r28hmp/*http%3A// is a dead link! Sorry about that!
While I do not claim to be an expert I don't believe you are not comparing apples to apples when you compare GLD to GDX. GLD, if I am not mistaken deals in the physical gold and when you buy shares in GLD you are buying physical gold even though you might not take possession of it!
When one buy's GDX or GDXJ you are buying into a group of miners. While these miners may mine gold they also mine copper, silver and other metals. You don't buy the actual product of their labor. You are buying into their abilities to mine the physical stuff efficiently and at a low cost! You are in many respects buying the management team of a particular company as well. Since my time is limited the ETF for the small miner seems to be a match for my budget. Hopefully the fund manager is effective in his/her management of the fund and picks good companys. I also have a couple of miners that are not in the ETF I own. I like to broaden my exposure by a little miner diversification.
I might be wrong on this, but it is my understanding that the miners have actually out performed the physical stuff over time!
I want exposure to gold, but I feel my dollars go further with the miners since their shares are much cheaper and the up side can be better than physical gold. Also diversification, I feel, is better with the miners since they usually have several mines in different countries and do produce other metals besides gold.
GDXJ for leverage going forward. Value will be the key as the gold bull continues and the juniors will be the place to find it.
Are you going to buy a stock that's already made 52 week highs or do you want to buy a stock that has a lot more upside potential?
If you believe gold will continue to run, at some point the retail investor will turn to gold and they will look for value.
This ETF reduces the risk of buying individual junior stocks.
In short, a lot more alpha in the juniors.
In any group, whne the group goes, the lower priced riskier members tend to outperform on a percentage basis.
This one year chart compares GDX to GLD and also to the top 4 members of GDXJ. Where would you rather have had your money?
Step one, be right at the macro level.
Step two, pick the right stuff.