January 30, 2008 at 10:00 am by Tom Lydon
What is an investor to do when he or she wants a gold miner’s exchange traded fund (ETF) without all the attendant risks?
That was the dilemma facing Trader Mark at Seeking Alpha. In the wake of the South African mining halt, he wanted a stock that wouldn’t be so concentrated in that area of the world. He also wanted a stock with as little risk and as unhedged as possible.
We think the real meat in his story is this nugget at the end: "There is also more risk as opposed to playing the simple route and just buying the metal ETF itself." Mark wants a stock because it would offer some nice leverage opportunities if gold marches on upward.
The Market Vectors Gold Miners (GDX) offers exposure around the world. Its top two holdings, both in Canada, make up 24.6% of the fund. Its three South African holdings make up 14.1%, a relatively small portion of its 34 total holdings. In 2007, it finished up 16.8%, while so far this year it’s up 11.7%.
We just wonder: when you’re looking for exposure to gold or anything else, why complicate things for yourself when ETFs make it so easy?
Tags: Canada, EWC, Material ETFs, Metals, South Africa
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March 2nd, 2008 at 5:36 pm
It’s very simpel!
An ETF provides you with the return of an Index;
A Gold Stock (or a selection of Gold Stocks) gives you a return on skillful and well thought off Judgement!
Now, all you have to do,is adding a nice portion of good luck -and you are well ahead of the Race.