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Should You Buy Soaring Gold Miner ETFs After Warren Buffett's Investment?

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Gold has surged about 30% this year, making it one of the best performing major asset classes of 2020. The surge is mainly due to investors’ search for safer assets amid rising uncertainty for the global economy due to the coronavirus crisis. Gold miners that are seen as leveraged plays on the price of the metal, have seen their share prices soar as a result.

Gold miners got a big boost when Warren Buffett’s Berkshire Hathaway (BRK.B - Free Report) reported that it acquired a $565 million stake in Barrick Gold (GOLD - Free Report) , one of the largest gold-mining firms, in the second quarter. The move was surprising because Buffett has in the past said he doesn’t like investing in gold.

Gold miners are much more volatile than the metal. Gold is one of the rarest metals in the earth’s crust and much of the easier-to-get ore has already been mined, according to a report in WSJ. Miners may therefore face rising costs in the coming years.

The largest gold miner ETFs—the VanEck Vectors Gold Miners ETF (GDX - Free Report) —is a market cap weighted ETF with over $17 billion in AUM. Newmont (NEM - Free Report) and Barrick are its top holdings.

The VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report) invests in small cap firms involved in gold and silver mining.

The iShares MSCI Global Gold Miners ETF (RING), cheapest fund in the space, is also cap weighted but is more top-heavy than GDX.

Please watch the short video above to learn more about these ETFs.

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