The month of May was tough for the broader stock market as escalation in trade war fears and the latest tariff threat to Mexico stoked worries of a global recession. In fact, the Wall Street logged in the worst May since 2010, proving the old adage “Sell in May Go Away” true this year.
The weak economic backdrop drove demand for safe haven investments. Against such a backdrop, gold is considered a great store of value and hedge against market turmoil. Additionally, the current dovish central bank and the expectation of interest rates cut in the near term given the gloomy economic outlook have raised the appeal for the bullion. Lower interest rates will continue to weigh on the dollar against the basket of currencies, raising the yellow metal’s attractiveness as it does not pay interest like fixed-income assets (read: Forget Trade Fears, Invest in Defensive Sector ETFs).
Further, hedge funds and money managers increased their net long positions in COMEX gold in the week ended May 28 per the latest data.
Based on the bullish fundamentals, gold price surpassed the key $1,300 level for the first time since April. Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market.
Given this, we highlight four gold mining ETFs and stocks that have led the market in May. These could be excellent plays for investors who believe that gold will continue to move higher given the rocky fundamentals.
VanEck Vectors Gold Miners ETF (GDX - Free Report) : Up 6.4%
This is the most-popular and actively traded gold miner ETF with AUM of $9.2 billion and average daily volume of around 44 million shares. The fund follows the NYSE Arca Gold Miners Index, holding 46 stocks in its basket. Canadian firms account for half of the portfolio, while the United States (18.9%) and Australia (16.3%) round off the top three. The fund charges 52 bps in annual fees (read: 4 Sector ETFs Surviving May Swoon).
iShares MSCI Global Gold Miners ETF (RING - Free Report) : Up 6.3%
This 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 35 securities in its portfolio. Here again, about half of the portfolio is allotted to Canadian firms while United States, Australia and South Africa round off the next three with double-digit exposure each. The fund charges 39 bps in fees and expenses and trades in good volume of 192,000 shares per day. It has been able to manage assets worth $199.9 million.
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU - Free Report) : Up 5.4%
This fund provides investors 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 28 stocks in its basket. Canada takes the lion’s share at 53%, followed by Australia (14%) and United States (10%). It has amassed $12.8 million in its asset base and charges 60 bps in fees per year. Volume is light at nearly 8,000 shares.
Sprott Gold Miners ETF (SGDM - Free Report) : Up 5.1%
This fund follows the Sprott Zacks Gold Miners Index, holding 27 stocks in its basket. Here again, Canada takes the top spot at 78% followed by 9% in South Africa and 6% in the United States. The fund has amassed $140.7 million in its asset base and trades in moderate volume of around 40,000 shares a day. It charges 57 bps in annual fees from investors (read: ETF Winners & Losers As China Retaliates).
US Gold Corp : Up 17.9%
It focuses on the exploration and development of gold properties. With a market cap of $25.49 million, it has a Zacks Rank #3 (Hold) and a VGM Score of F.
Pretium Resources Inc. (PVG - Free Report) – Up 15.4%
This company is engaged in the acquisition, exploration and development of precious metal resource properties in the Americas. It has a Zacks Rank #3 and a VGM Score of B. The stock has a market cap of $1.51 billion.
Gold Fields Limited (GFI - Free Report) – Up 13.8%
This is one of the world's largest unhedged gold producers with operating mines in South Africa, Ghana, and Australia. It has a Zacks Rank #2 (Buy) and a VGM Score of B. The stock has a market cap of $3.45 billion.
AngloGold Ashanti Ltd. (AU - Free Report) : Up 9.2%
It is an operator of a gold mining and exploration company. With a market cap of $5.1 billion, it has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
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