ETF Chart of the Day: Gold Miners

ETF Trends

Yesterday, on a gap up in spot Gold prices (GLD and IAU up 1.40%), we saw predominantly call buying activity in a Gold Miners Equity ETF, Market Vectors TR Gold Miners (GDX) .

GDX has amassed more than $8 billion since its inception in 2006, and has exposure to names including ABX, GG, and NEM for instance.

Market Vectors Junior Gold Miners (GDXJ) is another fund in this segment, concentrating instead  on smaller cap names in the Mining space whereas GDX has a decidedly larger cap slant.

Other entrants in this space include PowerShares Global Gold and Precious Metals Portfolio (PSAU) and iShares MSCI Gold Miners (RING) , which debuted only in January of this year. For those looking to leverage their exposure from a short term trading standpoint to the Gold Miners equity space, Direxion offers Direxion Daily Gold Miners Bull 3X Shares (NUGT) .

In 2012 many market observers have noted the staggering under-performance of the Gold Miner related equities compared to the actual returns of spot gold. For instance, YTD performance returns look like this: Gold (IAU +3.35%, whereas the Miners are as follows: GDX -18.32%, PSAU -18.48%, GDXJ -22.19%, RING -28.01%).

The performance story does not get any better when examining trailing one year performance either, as the Miners are clearly lagging the returns of spot gold by a wider than historically observable gap.

While it is difficult to forecast if this performance gap between the Miners and spot Gold is the “new norm”, we have seen recent evidence of options players trading from the long side of the miners via GDX and other ETFs as mentioned in this space.

Market Vectors TR Gold Miners

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For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.

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