Gold prices have dropped off and miners associated with the precious metal have been dragged along with them. However, mining exchange traded funds have felt these steep declines before, and each decline has only made them stronger. Will this time be any different?
After a month of an appreciating U.S. dollar, coupled with a weakening gold, miners pulled through and recently came on top the one-day leader-board, writes Gary Gordon for ETF Expert.
GDX experienced similar sell-offs in other price peaks this year, and in each instance, the fund pushed even higher, incidentally setting new highs on its path upward. This begs the question of whether or not this similar situation could be the an opportune time to dip into miners, remarks Gordon.
Of course, if you are not that enthusiastic about the volatility in gold miners, a potential investor may consider SPDR S&P Metals & Mining (NYSEArca: XME) since it is less affected by the swings of a single underlying commodity.
As always, use the trend lines to pick your spots and find opportunities.
For more information on miners, visit our metals & mining category.
- Market Vectors Gold Miners (NYSEArca: GDX): up 38.5% year-to-date
- Market Vectors Gold Miners Juniors (NYSEArca: GDXJ): down 6.0% in the last month
- SPDR S&P Metals & Mining (NYSEArca: XME): up 92.5% year-to-date
For full disclosure, Tom Lydon’s clients own shares of XME.Max Chen contributed to this article.