Miner ETF's going down with the herd

Miner ETF's are not a valid alternative to avoid the lagging of precious metal miners compared to bullion or bullion ETFs.

Miners back to square 1.

Ultimately the broad stock market rally ran out of steam. The S&P retreated from its all time high and now is back to 1982.8. Not that this makes any difference for precious metals. After another rocky week, the metals end mixed. Since Friday Sept 19, Gold is almost flat, while silver is down 0.7% over the week. After the lowest close since several years at $17.5 on Thursday, there is a timid recovery to end the week with. Main victim is Palladium ($772), which sold off quite rapidly after its recent multi-year high above $900. Platinum is taken down in the slipstream to $1297, with the gold-to-platinum ratio now up to 0.94 once again.

Benchmark of Precious Metal Mining ETFs

A first glance: year-to-date graphs of :

1. GDX, Van Eck's large-cap Gold Mining ETF,
2. GDXJ, Van Eck's junior Gold Mining ETF,
3. SIL, the Global X Silver Mining ETF,
4. GLDX, the Global X Gold Explorer ETF.

The MVGDXJ Junior gold mining index

Close to a year ago, I first pointed to this junior mining index used as a benchmark for Van Eck’s GDXJ junior mining ETF. See : A junior gold mining index. Back then, the index was managed by the German firm “4asset-management”. Recently Van Eck took over the index calculation. Its composition and time series are now revealed on Van Eck’s website… for those to whom an access is granted. Whereas initially the access policy seemed rather liberal, now it has become restricted to ‘finance professionals’ (which doesn’t include me as a blogger.) The present posting is therefore the final one on this topic.

Junior gold miners and explorers lagging majors

On the gold miner pulse page of this blog, I have been pointing to the dramatic underperformance of juniors in the brutal miners swoon caused by the recent severe gold correction.

Since early April, junior miners ceased to outperform mining majors. Juniors nor majors were able to keep up with the pace of the gold price rising during summer. Whereas miners withstood a first pull back of the gold price rather well, the correction in the second half of September turned out to be dramatic. Junior miners and explorers paid a high price and much of their advantage over major miners is melting away. 

Junior miner performance on that blog page is measured using the MVGDXJ index. That index is going back to end Dec-2003 and offers a relatively long perspective when compared to the GDXJ Etf itself.

A Junior Gold Mining Index

March 7, 2011

Those investing in junior gold miners or explorer/developers may scan through their own little universe of stocks they have invested in or are planning to do so. They certainly look at graphs providing the necessary view on historic performance, they compare stocks against one another, but unlike gold mining majors followed by a few precious metal mining indices, there isn’t really an accepted benchmark for juniors. You can read below my comment on this problematic topic:

Investors prefer turn around stories to solid track records

Technical analysis is usually aimed at market timing and determining entry, exit and/or stop-loss levels. Some volume driven technical indicators are also useful in more historic perspective for investment analysts involved in investor behaviour studies. Two of those indicators are the ‘On Balance Volume’ (OBV) and the ‘Price Volume Trend’ (PVT).

Investing directly in juniors or through the GDXJ ETF?

In a recent essay, Adam Hamilton of Zeallc.com pointed to the strong performance of the GDXJ Exchange Traded Fund since it was launched hardly one year ago by Van Eck. Especially last two months GDXJ is outperforming both the large cap focussed GDX and bullion. No better praise than that of a competitor.

Rechtstreeks in Junior mijnbedrijven investeren of opteren voor de GDXJ ?

Recent interviewde Alix Steel van StreetTV John Doody, editor van GoldStockAnalyst.com, over de goud- en zilvermijnen uit het GDXJ ETF die hoofdzakelijk op US beurzen verhandeld worden.

Videolink: Alix Steel van StreetTV interviews John Doody editor of GoldStockAnalyst.com

John Doody geeft eerder de voorkeur aan een investering in de GDXJ Etf (uitgegeven door Van Eck ) dan aan een rechtstreekse investering in de selectie van mijnaandelen met US-listing. Vooral de drie zilverproducenten behoren tot de achterblijvers in de GDXJ. Bovendien omvat de GDXJ voor ongeveer 50% van de kapitalisatie mijnbedrijven die op de Canadese TSX verhandeld worden.

In een bijhorend artikel van Alix Steel passeren vijf aandelen met US-listing in de GDXJ de revue.