Potential Australian Miner Merger Could Affect Related Market Vectors ETF

Gold and the mining companies that extract the metal have attracted great interest as inflation fears loom and investors seek havens. There is a related ETF that tracks the exploratory aspect of this commodity, GDX.

Although the equities market has rallied over the past few months, the price of gold has stood its ground and kept most of its gains. The inflation fears have sustained as the Federal Reserve has continued to print money and fund stimulus packages, creating more demand for gold as of late, reports Chris Zappone for Brisbane Times.

Meanwhile, the smaller mining companies in Australia are pushing the movement to merge, as they want to bulk up and meet the investment demand. At least two multimillion-dollar mining deals have been tabled in the past few weeks and investment bankers and analysts are counting on more to come, reports James Pethokoukis for Reuters.

The goal is to put assets together so that the companies can do better together than they could do apart. The names of the companies have not been disclosed.

• Market Vectors Gold Miners ETF (GDX): up 16.3% year-to-date

Comments

[Alan Young:]

I don't know why you say the GDX tracks the "exploratory" side of the industry. The fund is dominated by large companies with well-establish production lines.

For the smaller companies, the more relevant ETF is not yet on the market:
seekingalpha.com/artic...

Jul 05 03:18 PM

[Tom Lydon:]

Granted the fund is dominated by large companies, with Barrick Gold Corporation (ABX) comprising nearly 11% of the funds NAV, however gold exploration is a key part of ABX's business, as is it a key part of Goldcorp's (GC) business, which comprises 9.6% of GDX's NAV. GDX is a good way to gain exposure to the exploration of gold.
-Tom

Jul 15 01:07 PM