After wrapping up its biggest quarterly loss since the fourth quarter of 2016, gold saw strength to start the second quarter as positive fundamentals started to build up in the space. The twin tailwinds of a declining dollar and declining yields have started to rekindle investors’ interest in the precious metal.
Though the Federal Reserve upgraded the outlook for the economy and inflation, it still pledged to provide easy policies through ultralow interest rates and large monthly bond purchases to provide support to the economy. It reiterated its commitment to maintain lower rates near zero through 2023. This means that cheap money will flow for more quarters to come, resulting in a sharp decline in the U.S. dollar against the basket of major currencies giving boost to the gold price. Notably, the yellow metal is on track for a weekly gain of more than 1% this week (read: U.S. Dollar to Strengthen? ETFs to Gain/Lose). The persistently accommodative stance on monetary policy has also helped Treasury yields, which took toll on the precious metal lately, to cool down this week. Additionally, the Fed Chair Powell stated that the rise in inflation this year is temporary and warned that an uptick in COVID-19 cases could slow the recovery. This has raised the appeal for the yellow metal as a store of value. The gold has been under immense pressure this year, plunging 8% amid strong optimism over global economic recovery and rising bond yields, which has dulled the shine for the yellow metal as it does not pay any interest like the fixed-income assets. Acting as leveraged plays, gold miners tend to experience more gains than the gold bullion. As a result, we have highlighted five gold mining ETFs that are benefiting the most from recovering metal market trends over the week and are likely to continue their strong performance at least in the near term. Sprott Junior Gold Miners ETF ( SGDJ Quick Quote SGDJ - Free Report) : Up 5.7% This fund follows the Solactive Junior Gold Miners Custom Factors Index, which measures the performance of junior gold producers with the strongest revenue growth and junior exploration companies with the strongest stock price momentum. It holds 36 stocks in its basket with Canadian firms making the largest share at 37.1%, followed by Australia (32.5%) and the United States (9.7%). The fund has amassed $121.4 million in its asset base and trades in lower volume of around 40,000 shares a day. It charges 50 bps in annual fees from investors (read: Time for Gold Mining ETFs?). Global X Gold Explorers ETF ( GOEX Quick Quote GOEX - Free Report) : Up 4.9% The ETF provides exposure to companies involved in the exploration of gold and tracks the Solactive Global Gold Explorers & Developers Total Return Index. It is home to 47 stocks, and Canadian firms dominate the fund’s return at 50.9% followed by Australia (16.9%) and Britain (15.2%). The fund is unpopular and illiquid with AUM of $54.7 million and an average daily volume of 19,000 shares. Expense ratio comes in at 0.65%. VanEck Vectors Junior Gold Miners ETF ( GDXJ Quick Quote GDXJ - Free Report) – Up 4.6% GDXJ focuses on small-cap companies that are involved primarily in the mining for gold and/or silver by tracking the MVIS Global Junior Gold Miners Index. Holding 96 stocks in its basket, Canadian firms dominate the fund’s portfolio at 48.2%, while Australia (14%) and South Africa (9%) round out the top three. The product has AUM of $5.3 billion and charges 53 bps in annual fees. It trades in heavy volume of around 6.4 million shares a day on average. U.S. Global GO GOLD and Precious Metal Miners ETF ( GOAU Quick Quote GOAU - Free Report) – Up 4.6% This fund provides investors with access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means. It tracks the U.S. Global Go Gold and Precious Metal Miners Index, holding 29 stocks in its basket. Canada takes the lion’s share at 66.6%, followed by Australia (12.1%) and the United States (9.8%). The ETF has amassed $97.8 million in its asset base and charges 60 bps in fees per year (read: Can Gold ETFs Gain in 2021 After Two Positive Years?). Amplify Pure Junior Gold Miners ETF ( JGLD Quick Quote JGLD - Free Report) – Up 4.4% This ETF offers exposure to companies engaged in junior and exploratory gold mining by tracking the EQM Pure Junior Gold Miners Index. It holds 58 stocks in its basket with Canadian firms taking the largest share at 53%, closely followed by Australia (23.6%). The product has amassed $1.9 million in its asset base since its inception last December. It trades in an average daily volume of just 3,000 shares and charges 49 bps in annual fees from investors. Want key ETF info delivered straight to your inbox?
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