Head-To-Head: Gold vs. Miners

ETF Database

Gold is one of the oldest corners of the investment community; this yellow metal standing as a powerful hedge for when markets turn sour. As one of the most popular commodities, ETF issuers were quick to cover every aspect of the lucrative market, with ETFs focusing on the physical, future, production and exploration of this one metal [see ETF Cheat Sheet: Precious Metals].

Through the rise of ETFs has come the popularity of not just holding physical gold, but instead tracking the futures for the yellow metal and funds that buy shares of mining corporations that make their income through gold exploration and refining.

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Mining Services ETF
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The chart below highlights three gold exploration and production ETFs, comparing their performances across various time frames to a popular gold futures fund [see Where Does My Mining ETF Dig?]:

  • SPDR Gold Trust (GLD, A)
  • Market Vectors TR Gold Miners (GDX, B)
  • Market Vectors Junior Gold Miners ETF (GDXJ, B)
  • Global Gold and Precious Metals Portfolio (PSAU, C+)

Across the board, gold has under performed over the years, especially since the global economy started to get back on track. Mining operations have still not picked up from the recession, with this sector’s returns remaining low for the past three years. Investors who bought gold futures three years ago are the only people who have made a profit. Investors should still keep a close eye on the relationship between gold futures and producers; once the economy stabilizes, investors may once again see a general upswing in both returns. 

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Disclosure: No positions at time of writing.

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