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North Korea Comments Send Gold ETFs Higher Again

Sweta Killa
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Tensions between North Korea and United States escalated once again after the former called a weekend tweet by President Donald Trump as a declaration of war. North Korea’s foreign minister threatened that the country will consider all possible countermeasures, including the right to shoot down U.S. bombers outside of its airspace.

Hearing the foreign minister of North Korea speak at UN in the weekend, Trump tweeted “If he echoes thoughts of Little Rocket Man, they won’t be around much longer!” Trump has repeated Rocket Man for Kim Jong-un several times in recent weeks.

The United States in the weekend launched B-1B bombers and F-15 fighter jets in international airspace east of North Korea, the extreme point north of the Demilitarized Zone between North and South Korea that U.S. fighters or bombers have ever flown. Last week, Trump also imposed a new round of sanctions against North Korea and put a ban on international banks from the American market if they facilitate the rogue nation. The move was to persuade the Kim government to end its threatening nuclear missile development program (read: Trump Widens North Korea Sanctions: ETFs in Focus).

Market Impact

The latest North Korean comments led investors’ flight to safety in gold. Notably, gold futures rose 1.1% while spot gold rose 0.9%. With this, gold has logged in nearly 14% gains this year, much higher than the increase of 11% for the S&P 500 index (read: Top-Ranked ETFs That More Than Doubled the S&P 500 This Year).

Acting as leveraged plays on underlying metal prices, metal miners witnessed more gains than their bullion cousins on the day. As a result, we have highlighted four mining ETFs and stocks that benefited the most from the escalation of geopolitical tension.


Global X Gold Explorers ETF GOEX – Up 2.13%

The ETF provides exposure to a broad range of companies involved in the exploration of gold deposits and tracks the Solactive Global Gold Explorers & Developers Total Return Index. Holding 52 stocks in its basket, it is focused on small cap with 70% share with each security accounting for less than 7.6% of assets. Canadian firms dominate the fund’s returns at 62% followed by Australia and the United States. The fund is unpopular and illiquid with AUM of $46.6 million. Expense ratio comes in at 0.66%

Sprott Junior Gold Miners ETF SGDJ – Up 2.01%

This ETF targets the small-cap segment of the gold mining industry by tracking the Sprott Zacks Junior Gold Miners Index. In total, the fund holds a small basket of 38 stocks with tilt toward the top firm at 10.5%. In terms of country exposure, Canada takes the largest share at 81% while the United States receives just 8% of SGDJ. The fund has accumulated $172.1 million in AUM and has an expense ratio of 0.57%.

iShares MSCI Global Gold Miners ETF RING - Up 2%

This ETF follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 36 securities in its portfolio. The product is heavily concentrated on the top two firms with a combined share of 28% of total assets. Canadian firms take the half of the portfolio, while United States and Australia round out the top three with double-digit exposure each. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $380.6 million (see: all the Material ETFs here).

VanEck Vectors Junior Gold Miners ETF GDXJ – Up 1.9%

This is a small-cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 75 stocks in its basket, it is well spread out across components with none holding more than 4.57% of assets. Canadian firms dominate the fund’s portfolio at 55.4%, while Australia (16.5%) and South Africa. (9.5%) round out the top three spots. The product is by far the largest and most popular in the gold mining space with AUM of $4.1 billion and charges 52 bps in annual fees.

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VANECK-JR GOLD (GDXJ): ETF Research Reports
SPROTT-JR GLD M (SGDJ): ETF Research Reports
ISHARS-M GL GLD (RING): ETF Research Reports
GLBL-X GOLD EXP (GOEX): ETF Research Reports
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