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Gold Isn't The Only Reason This Miners ETF Is Soaring

getting absolutely wrecked this year, but that’s not the case with gold. When gold glitters, it has a tendency to overshadow other precious metals, as it’s doing this year.” data-reactid=”19″>Some commodities are getting absolutely wrecked this year, but that’s not the case with gold. When gold glitters, it has a tendency to overshadow other precious metals, as it’s doing this year.

What Happened

Why It’s Important

according to VanEck.” data-reactid=”24″>GDXJ’s underlying index tracks “the overall performance of small-capitalization companies that are involved primarily in the mining for gold and/or silver,” according to VanEck.

The emphasis is on silver, as GDXJ’s silver miners exposure is proving useful.

VanEck said in a recent note.” data-reactid=”26″>“Silver performance has lagged gold for a number of years, driving the gold/silver ratio to an all-time high of 123 in March,” VanEck said in a recent note.

“Silver mounted a comeback in May, gaining 18.3%, amid some of the strongest inflows into silver bullion exchange-traded funds since their inception. Silver might see further gains as it is still underperforming gold by 14% this year and the gold/silver ratio remains at 97, far above the five-year average of 80.”

Many of GDXJ’s top 10 holdings, which combine for 45.45% of the fund’s roster, produce silver in addition to gold and some of the fund’s holdings are dedicated silver miners.

What’s Next

Obviously, GDXJ is a small-cap fund, and as is the case with small caps, it’s been lagging its large-cap counterparts.

If small-cap stocks are showing plenty of signs of life, that could facilitate a another move higher in GDXJ.

“In a bull market, large-cap companies typically move first, followed by stronger performance by mid-tiers and juniors as the market advances,” according to VanEck.

“The lag in performance between the large and smaller companies is normally measured in weeks.  However, after a year we are still waiting for the smaller companies to outperform. Since gold broke out on June 20, 2019, the GDM, which is heavily weighted majors (66% as of the end of May), has gained 45.6%. The MVGDXJ, with an 87% combined weight in mid-tiers and juniors, has failed to outperform, gaining 44.4% over the same period. Investor sentiment has remained low so far in this cycle. We believe this is finally beginning to change, as shown by the 7.0% outperformance of MVGDXJ in May.”

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