Christian Magoon: Gold prices have been falling of late but some are calling for a rebound later in the year. The best gold miners ETF for a rebound in the price of gold should be the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ). GDXJ focuses on small cap names in the gold mining space and thus is more sensitive to the movement in gold prices. Unfortunately for investors in GDXJ over the last year, that additional sensitivity has primarily come in the form of greater declines for GDXJ versus gold and even other gold mining ETFs.
Best Gold Miners ETF For A Bounce: GDXJ
GDXJ is down close to 50% over the last 12 months, which is far greater than the large cap gold miners ETF (NYSEARCA:GDX) or the largest physical gold ETF, the SPDR Gold Trust (NYSEARCA:GLD). Here’s the one year chart form stiockcharts,com illustrating not only the performance of the three ETFs but the extra sensitivity of GDXJ to gold prices.
Some may argue that the best gold miners ETF is the largest ETF of the peer group GDX because it has tracked gold prices more closely than GDXJ. While this is true, it is also true that GDX does not appear to be as oversold as GDXJ. Here’s a closer breakdown of the two ETFs vying for the title of best gold miners ETF to illustrate GDXJ’s more bearish behavior during negative periods for gold stocks.
Best Gold Miners ETF During Current Bounce
Of course the proof of the best gold miners ETF will be in actual performance and over the last week we have seen a nice little run upward in gold stocks. As demonstrated in the chart above, GDXJ lead the group gaining 5.61% with the next closest gold stock ETF, RING, gaining 4.41%. Thus although it is a small time period, the best gold miners ETF for the current bounce is GDXJ.
The GDXJ ETF contains around $2 billion in assets and has been decimated in size by poor market returns over the last year. For those who believe gold prices will rally AND that gold stocks will respond in kind, the best gold miners ETF appears to be the Market Vectors Junior Gold Miners ETF. In closing, here’s the fund profile for GDXJ, from GoldETFs.biz.
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.”