If it was once fair to say that gold mining stocks and ETFs were left for dead then it is now fair to say the resuscitation of these securities has been impressive. In just the past week, the Market Vectors Gold Miners ETF (GDX) , the largest gold mining fund by assets, has surged 17% and that includes Thursday’s 6% gain on volume that was more than double the daily average.
The Direxion Daily Gold Miners 3X Bull Shares (NUGT) , the triple-leveraged equivalent of GDX, soared 18%…just on Thursday. Don’t forget about the PowerShares Global Gold and Precious Metals Portfolio (PSAU) , which has been impressive in its own right with a five-day gain of 14%. [Have Gold Miners ETFs Finally Found a Bottom?]
PSAU’s 77-stock lineup features many of the same names, though with noticeably different allocations, that are found in GDX. For example, Goldcorp (GG), Newmont Mining (NEM) and Barrick Gold (ABX) combine for 22.8% of PSAU’s weight. Those stocks combine for over 34% of GDX’s weight.
PSAU’s recent “lag” of GDX is in large part attributable to the fund’s 4.45% weight to Australia’s Newcrest Mining. The company, which is the ETF’s fourth-largest holding, took a $5.8 billion writedown earlier this week and saw its credit rating cut to BBB- from BBB by Standard & Poor’s. However, PSAU’s composition does offer plenty of near-term opportunity for investors looking for different spin on precious metals miners ETFs. [Gold Miners ETF to Get New Look Index]
PSAU’s advantages extend beyond the possibility of Newcrest being a rebound play. The PowerShares offering features decent exposure to small-cap mining names. Small-cap stocks represent 17.3% of the ETF’s weight, according to PowerShares data. Earlier this week, it was revealed that next month, GDX’s underlying index will begin excluding companies with market values below $750 million.
PSAU’s small-cap exposure is useful on two fronts. First, it increases investors exposure to silver miners. The fund is home to no fewer than 10 pure-play silver miners. Second, by not skimping on small-caps, PSAU does feature some platinum metals group miners on its roster. By comparison, GDX is focused almost exclusively on gold miners with some silver producers sprinkled in. [Silver Miners ETFs Test Short-Term Trendlines]
The average market cap of PSAU’s holdings is $7.4 billion. The fund, which charges 0.75% per year, has a P/E ratio of 11.89 and a price-to-book ratio of 1.16.
PowerShares Global Gold and Precious Metals Portfolio
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of NUGT.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
- Barrick Gold