Gold Miners ETF Products Jump Ahead Of Gold Prices (GDX, GDXJ, GLDX, GLD)
Christian Magoon: Gold miners ETF products bucked the tide yesterday. While the price of gold was essentially flat, gold miners ETF funds like Global X Gold Explorers ETF (NYSEARCA:GLDX), Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) and Market Vectors Gold Miners ETF (NYSEARCA:GDX) rose between 1.7% – 5.5% on the day. Here’s the daily performance chart showing the bounce gold miners had on Monday.
The truth is that gold miners ETF funds have been outperforming physical gold ETFs for over a month now. Perhaps it’s because gold miners ETF products had been the victim of such a steep sell off versus gold that contrarians stepped in to bet that the disconnect had to revert back to the mean. Here’s a performance chart of the best performing ETFs over the last month. Note the largest physical gold ETF (NYSEARCA:GLD), takes the bottom rung of this ranking while mining oriented products have soared.
Despite the surge in gold miners ETF performance of late, these ETFs are still in negative territory in 2012 and have a dreadful one year track record. Their disconnect from gold prices had punished their valuations and caused some to question whether gold stocks were now permanently disconnected from gold. Lately however there has been more chatter about a reversion to the mean for gold stocks and thus these volatile companies have been on the rise. Here’s a one year chart from stockcharts.com comparing the SPDR Gold Trust (NYSEARCA:GLD) against the two largest gold miners ETF funds, GDX and GDXJ.
Going forward it appears that gold miners have a decent amount of momentum. While these stocks and ETFs can work off the premise of being “oversold” or “disconnected for too long,” physical gold will be mired in the EU drama and the resulting strength or weakness of the U.S. Dollar. Thus gold miners may continue their trend of out performance, despite a poor performance over longer time periods.
Christian Magoon is Publisher of GoldETFs.biz and IndiaETFs.com. He is also CEO of Magoon Capital, a strategic consultant firm to asset managers. Christian Magoon is an ETF insider, having launched over 40 ETFs in the United States to date. A widely recognized thought leader on finance and market issues, Christian regularly contributes to many financial media outlets. Prior to forming Magoon Capital in 2010, Christian was President of Claymore Securities (now Guggenheim Investments), where he built one of the fastest growing and most innovative ETF businesses in the country, gathering more than $3 billion in AUM in three years. He launched more than 40 ETFs, introducing many “firsts” to the U.S. market, including the first Frontier Markets, Sector Rotation, Solar Energy, Timber, BRIC and suite of China focused ETFs. Christian consistently provides his industry insights and knowledge as a commentator in the U.S. media speaking publicly on macro investment issues and ETF related topics. Follow him on Twitter @ChristianMagoon. In 2008, he was named by Institutional Investor News as one of the five people to watch in the U.S. ETF marketplace. In 2011, Financial Planning magazine dubbed Christian an “ETF Pioneer.”