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Want to Dig Into Mining ETFs with 100% YTD Gains Seen Already?
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Precious metals funds have probably never been so precious as they are this year. A rush to seek safety for the most part of 1H16 triggered by global growth issues and a major event like Brexit at the end of the second quarter bolstered demand for the safe haven assets. As a result, safe metals like gold have seen a stupendous rally this year after three subdued years (read: Gold ETFs to Continue Their Bull Run: Here's Why?).
Gold bullion ETF SPDR Gold Shares (GLD - Free Report) is up over 26% so far this year (as of August 9, 2016). Though strong July job data boosted the greenback on Fed hike speculation and in turn took the shine off gold for a while, the yellow metal got back its sheen as soon as news of soft Q2 productivity came on August 9.
Inside Precious Metal Rally
Investors should note that not only gold, most precious metals are also on a tear this year on a subdued greenback as these metals are linked to the U.S. dollar. Dovish central banks across developed economies, including the U.S., to ward off growth issues have actually made this asset class a winner and are expected to keep it psyched up in the coming days.
In fact, silver ETFs have seen more uptrend with iShares Silver Trust ETF (SLV - Free Report) returning about 42% so far this year. iPath Bloomberg Precious Metals Subindex Total Return ETN , ETRACS CMCI Long Platinum Total Return ETN and ETFS Physical Palladium Shares ETF (PALL - Free Report) are up about 35%,30.5% and 24%, respectively.
The gains in silver were stronger because many investors view silver as a leveraged play of gold, as per ETF Securities. Plus, silver has high usage in industrial activities with about 50% of total demand coming from industrial applications. With industrial activities gaining traction globally, albeit slowly, silver investing is back with a bang. The metal is also used in the booming solar industry.
Why Mining ETFs Returning Higher Than Bullion?
First, mining stocks are often viewed as the leveraged plays of the underlying metals, which is helping stocks of gold and silver mining companies. But a favorable demand-supply scenario holds the key to this surge. Also, cost containment bodes well for this space (read: Go Beyond Bullion; Buy These Mining ETFs).
As per CPM Group, silver mining production is likely to decline for the first time since 2011 while demand from industrial usage and jewelry is on its way to see the fourth successive increase in 2016.
As a result, the silver and gold mining industries are in the top 5% and 6% of the Zacks Industry Rank, at the time of writing (read: Reasons to Bet on Gold Mining ETFs Now).
Given this recent move, it might be worth it to take a closer look at some broad mining ETF options as possible investments. Below, we highlight five choices in this space, each of which has added over 100% so far this year.
If global growth worries remain in place in the days to come and operational activities remain strong for the mining companies, these mining ETFs may continue to be excellent plays for investors looking to cash in on the spurt in the metal mining space.
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Want to Dig Into Mining ETFs with 100% YTD Gains Seen Already?
Precious metals funds have probably never been so precious as they are this year. A rush to seek safety for the most part of 1H16 triggered by global growth issues and a major event like Brexit at the end of the second quarter bolstered demand for the safe haven assets. As a result, safe metals like gold have seen a stupendous rally this year after three subdued years (read: Gold ETFs to Continue Their Bull Run: Here's Why?).
Gold bullion ETF SPDR Gold Shares (GLD - Free Report) is up over 26% so far this year (as of August 9, 2016). Though strong July job data boosted the greenback on Fed hike speculation and in turn took the shine off gold for a while, the yellow metal got back its sheen as soon as news of soft Q2 productivity came on August 9.
Inside Precious Metal Rally
Investors should note that not only gold, most precious metals are also on a tear this year on a subdued greenback as these metals are linked to the U.S. dollar. Dovish central banks across developed economies, including the U.S., to ward off growth issues have actually made this asset class a winner and are expected to keep it psyched up in the coming days.
In fact, silver ETFs have seen more uptrend with iShares Silver Trust ETF (SLV - Free Report) returning about 42% so far this year. iPath Bloomberg Precious Metals Subindex Total Return ETN , ETRACS CMCI Long Platinum Total Return ETN and ETFS Physical Palladium Shares ETF (PALL - Free Report) are up about 35%,30.5% and 24%, respectively.
The gains in silver were stronger because many investors view silver as a leveraged play of gold, as per ETF Securities. Plus, silver has high usage in industrial activities with about 50% of total demand coming from industrial applications. With industrial activities gaining traction globally, albeit slowly, silver investing is back with a bang. The metal is also used in the booming solar industry.
Why Mining ETFs Returning Higher Than Bullion?
First, mining stocks are often viewed as the leveraged plays of the underlying metals, which is helping stocks of gold and silver mining companies. But a favorable demand-supply scenario holds the key to this surge. Also, cost containment bodes well for this space (read: Go Beyond Bullion; Buy These Mining ETFs).
As per CPM Group, silver mining production is likely to decline for the first time since 2011 while demand from industrial usage and jewelry is on its way to see the fourth successive increase in 2016.
As a result, the silver and gold mining industries are in the top 5% and 6% of the Zacks Industry Rank, at the time of writing (read: Reasons to Bet on Gold Mining ETFs Now).
Given this recent move, it might be worth it to take a closer look at some broad mining ETF options as possible investments. Below, we highlight five choices in this space, each of which has added over 100% so far this year.
Silver Miners ETF (SIL - Free Report) – Up 181.9%
VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report) – Up 164%
iShares MSCI Global Gold Miners ETF (RING - Free Report) – Up 136.3%
Sprott Gold Miners Exchange Traded Fund SGDM – Up 126.8%
VanEck Vectors Gold Miners ETF(GDX - Free Report) – Up 124.2%
If global growth worries remain in place in the days to come and operational activities remain strong for the mining companies, these mining ETFs may continue to be excellent plays for investors looking to cash in on the spurt in the metal mining space.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>