U.S. Markets closed

This Year’s Gains Nearly Gone for Gold Miners ETFs


At the start of this year, gold miners stocks and the exchange traded funds holdings those shares commenced one of the great Lazarus acts in recent memory in the ETF universe.

After being bludgeoned and left for dead in 2013, a year that for some represents the end of gold’s unprecedented bull market, the Market Vectors Gold Miners ETF (GDX) , Market Vectors Junior Gold Miners ETF (GDXJ) and other mining ETFs rebounded in spectacular fashion. [Remember These Mining ETFs]

For a good part of the first quarter, a list of the top-10 non-leveraged ETFs to that point in 2014 was likely to be comprised of several gold miners ETFs. That was the result of GDX gaining almost 26% from the start of the year to its March peak. GDXJ’s run was even more jaw-dropping as the largest ETF tracking small-cap miners surged 37% from Jan. 2 to March 13. [Mining ETFs Top Physical Gold Funds]

But in fashion that is eerily reminiscent of the recent declines experienced by biotechnology, Internet and social media ETFs, GDX, GDXJ and rival gold mining ETFs have significantly slumped since mid-March.

Arguably, it feels as though gold mining ETFs, despite the combined $9.4 billion residing in GDX and GDXJ, have tumbled in stealth fashion. After all, market observers have been busy lamenting the fate of once high-flying biotech and Internet ETFs. [Momentum ETFs Pounded Again]

Perhaps too busy to notice that this year’s gains for the major gold mining ETFs have are almost all gone. For example, GDXJ entered Tuesday’s session with a 6.76% year-to-date gain, but the ETF fell 4.8% yesterday. GDX is clinging to a 2014 gain of just under 2% after losing nearly 3.9% on Tuesday.

With Tuesday’s decline, GDX is down 23% since its March 14 peak. GDXJ is down 23.6% since its March 13 peak. Those losses are enough to have both ETFs back in bear market territory, a description that, in January or February, practically no one would have thought was possible for these ETFs.

As has been seen in the past, investors are not throwing in the towel on mining ETFs even as the funds tumble. Since the start of the second quarter, GDX and GDXJ have pulled in a combined $108 million in new assets.

Some investors are also refusing to get bearish on miners. Over the past month, the Direxion Daily Gold Miners Bear 3X Shares (DUST) and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) have seen redemption activity while the Direxion Daily Gold Miners Bull 3X Shares (NUGT) and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (JNUG) have seen creation activity, according to Direxion data for the week ending May 23.

Market Vectors Gold Miners ETF


Tom Lydon’s clients own shares of JDST.