SGDJ: Underweight On Junior Gold Mining Stocks

Summary

• Most bullish calls on gold merely consider one side of the argument. Although gold could surge, nothing is clear-cut.
• There are some phenomenal junior gold mining stocks out there. However, we think the Sprott Junior Gold Miners ETF portfolio composition is unfavorable.
• Quantitative metrics suggest that the Sprott Junior Gold Miners ETF's investment strategy provides underwhelming value additivity.
• The ETF is experiencing cross-sectional momentum and hosts an alluring dividend. However, such features might not be enough to entice further gains.
• We do not think the ETF is a sell. Instead, we assign an underweight score to the Sprott Junior Gold Miners ETF with a twelve-month horizon in mind.

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Investing in junior gold mining stocks is a hot topic at the moment as many investors are chasing excess returns during 2023's gold rush. The Sprott Junior Gold Miners ETF (NYSEARCA:SGDJ) lends

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.