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Gold is currently capturing investors' attention as it approaches a new all-time high, driven by expectations of upcoming U.S. interest rate reductions. Traditionally viewed as a safe haven during periods of economic uncertainty and low interest rates, gold's appeal has surged following a series of weak U.S. economic reports. The bullion soared above $2,100 an ounce on Mar 4, edging closer to the record high of $2,135.39 (read: Gold Tops $2,100: Here's How to Bet With ETFs).
This has led to smooth trading in the gold ETF space. Metal miners are the biggest beneficiaries of the surge in the gold price as these act as a leveraged play on the underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market.
Sprott Junior Gold Miners ETF (SGDJ - Free Report) stole the show, jumping 5.3% on the Mar 4 trading session, followed by gains of more than 4% each in iShares MSCI Global Gold Miners ETF (RING - Free Report) , VanEck Junior Gold Miners ETF (GDXJ - Free Report) , Sprott Gold Miners ETF (SGDM - Free Report) and VanEck Gold Miners ETF (GDX - Free Report) .
U.S. manufacturing slowed down more than expected in February, while Michigan University’s consumer confidence index dropped slightly. U.S. personal spending data also showed the weakest reading in three years. The latest bouts of weak data have raised the bets that the Fed might lower interest rates as soon as June, propelling gold prices.
Notably, gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity costs of holding non-yielding bullion and weaken the U.S. dollar. The yellow metal rose 2.3% last week, the second weekly profit in a row and the largest in 2024, as both the dollar and U.S. treasury yields declined.
Further, gold has been considered a store of wealth for investors. It is often used as a means of preserving wealth during times of financial and political uncertainty and usually does well when other asset classes struggle. As such, factors such as the forthcoming U.S. presidential election and conflicts in Ukraine and Gaza enhance gold's attractiveness to investors. Strong physical buying from central banks and investors in Asia has also been a pillar of support.
Moreover, hedge funds and money managers are actively seeking to place bullish bets on gold. Recent data from the Commodity Futures Trading Commission indicates a spike in net bullish positions on gold by hedge funds and money managers, marking a three-week high as of Feb 27. This shift in sentiment underscores the growing optimism among investors regarding gold's potential in the current economic climate.
Here’s a detailed discussion of the five ETFs mentioned earlier:
Sprott Junior Gold Miners ETF 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 45 stocks in its basket, with Australian firms making up the largest share at 52.5%, followed by Canada (36.3%).
Sprott Junior Gold Miners ETF has amassed $91.6 million in its asset base and trades in a lower volume of around 19,000 shares a day. It charges 50 bps in annual fees from investors.
iShares MSCI Global Gold Miners ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 37 securities in its portfolio. Canadian firms take more than half of the portfolio, while the United States takes the next spot at 20.1% share (read: Gold to Hit $2200 & Silver to Sizzle in 2024? ETFs in Focus).
RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. It has been able to manage assets worth $359.2 million and trades in a good volume of 84,000 shares per day.
VanEck Vectors Junior Gold Miners ETF offers exposure to small-capitalization companies that are involved primarily in the mining of gold and/or silver and tracks the MVIS Global Junior Gold Miners Index. Holding 97 stocks in its basket, Canadian firms dominate the fund’s portfolio with 52.6%, while Australia (19.1%) and Peru (4.4%) round out the top three.
VanEck Vectors Junior Gold Miners ETF has AUM of $3.6 billion and charges 52 bps in annual fees. It trades in a heavy volume of around 6 million shares a day on average.
Sprott Gold Miners ETF follows the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 33 stocks in its basket. Here again, Canada takes the top spot at 73.5%, followed by 15.1% in the United States.
Sprott Gold Miners ETF has amassed $192.5 million in its asset base and trades in a lower volume of around 32,000 shares a day. It charges 50 bps in annual fees from investors.
Market Vectors Gold Mining ETF is the most popular and actively traded gold miner ETF with AUM of $10.8 billion and an average daily volume of around 21 million shares. It follows the NYSE Arca Gold Miners Index, which measures the overall performance of companies involved in the gold mining industry. Market Vectors Gold Mining ETF holds 58 stocks in its basket. Canadian firms account for about 41.1% of the portfolio, while the United States (17.5%) and Australia (11.8%) round off the top three spots.
Image: Bigstock
Gold ETFs Jump on Rising Hopes for June Rate Cuts
Gold is currently capturing investors' attention as it approaches a new all-time high, driven by expectations of upcoming U.S. interest rate reductions. Traditionally viewed as a safe haven during periods of economic uncertainty and low interest rates, gold's appeal has surged following a series of weak U.S. economic reports. The bullion soared above $2,100 an ounce on Mar 4, edging closer to the record high of $2,135.39 (read: Gold Tops $2,100: Here's How to Bet With ETFs).
This has led to smooth trading in the gold ETF space. Metal miners are the biggest beneficiaries of the surge in the gold price as these act as a leveraged play on the underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market.
Sprott Junior Gold Miners ETF (SGDJ - Free Report) stole the show, jumping 5.3% on the Mar 4 trading session, followed by gains of more than 4% each in iShares MSCI Global Gold Miners ETF (RING - Free Report) , VanEck Junior Gold Miners ETF (GDXJ - Free Report) , Sprott Gold Miners ETF (SGDM - Free Report) and VanEck Gold Miners ETF (GDX - Free Report) .
U.S. manufacturing slowed down more than expected in February, while Michigan University’s consumer confidence index dropped slightly. U.S. personal spending data also showed the weakest reading in three years. The latest bouts of weak data have raised the bets that the Fed might lower interest rates as soon as June, propelling gold prices.
Notably, gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity costs of holding non-yielding bullion and weaken the U.S. dollar. The yellow metal rose 2.3% last week, the second weekly profit in a row and the largest in 2024, as both the dollar and U.S. treasury yields declined.
Further, gold has been considered a store of wealth for investors. It is often used as a means of preserving wealth during times of financial and political uncertainty and usually does well when other asset classes struggle. As such, factors such as the forthcoming U.S. presidential election and conflicts in Ukraine and Gaza enhance gold's attractiveness to investors. Strong physical buying from central banks and investors in Asia has also been a pillar of support.
Moreover, hedge funds and money managers are actively seeking to place bullish bets on gold. Recent data from the Commodity Futures Trading Commission indicates a spike in net bullish positions on gold by hedge funds and money managers, marking a three-week high as of Feb 27. This shift in sentiment underscores the growing optimism among investors regarding gold's potential in the current economic climate.
Here’s a detailed discussion of the five ETFs mentioned earlier:
Sprott Junior Gold Miners ETF (SGDJ - Free Report)
Sprott Junior Gold Miners ETF 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 45 stocks in its basket, with Australian firms making up the largest share at 52.5%, followed by Canada (36.3%).
Sprott Junior Gold Miners ETF has amassed $91.6 million in its asset base and trades in a lower volume of around 19,000 shares a day. It charges 50 bps in annual fees from investors.
iShares MSCI Global Gold Miners ETF (RING - Free Report)
iShares MSCI Global Gold Miners ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 37 securities in its portfolio. Canadian firms take more than half of the portfolio, while the United States takes the next spot at 20.1% share (read: Gold to Hit $2200 & Silver to Sizzle in 2024? ETFs in Focus).
RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. It has been able to manage assets worth $359.2 million and trades in a good volume of 84,000 shares per day.
VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report)
VanEck Vectors Junior Gold Miners ETF offers exposure to small-capitalization companies that are involved primarily in the mining of gold and/or silver and tracks the MVIS Global Junior Gold Miners Index. Holding 97 stocks in its basket, Canadian firms dominate the fund’s portfolio with 52.6%, while Australia (19.1%) and Peru (4.4%) round out the top three.
VanEck Vectors Junior Gold Miners ETF has AUM of $3.6 billion and charges 52 bps in annual fees. It trades in a heavy volume of around 6 million shares a day on average.
Sprott Gold Miners ETF (SGDM - Free Report)
Sprott Gold Miners ETF follows the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 33 stocks in its basket. Here again, Canada takes the top spot at 73.5%, followed by 15.1% in the United States.
Sprott Gold Miners ETF has amassed $192.5 million in its asset base and trades in a lower volume of around 32,000 shares a day. It charges 50 bps in annual fees from investors.
Market Vectors Gold Mining ETF (GDX - Free Report)
Market Vectors Gold Mining ETF is the most popular and actively traded gold miner ETF with AUM of $10.8 billion and an average daily volume of around 21 million shares. It follows the NYSE Arca Gold Miners Index, which measures the overall performance of companies involved in the gold mining industry. Market Vectors Gold Mining ETF holds 58 stocks in its basket. Canadian firms account for about 41.1% of the portfolio, while the United States (17.5%) and Australia (11.8%) round off the top three spots.
Market Vectors Gold Mining ETF charges 51 bps in annual fees.