Gold And Silver Miner ETFs Break Out

April 7th at 4:12am by Tom Lydon

Gold and silver miner exchange traded funds (ETFs) are breaking out as precious-metals prices are rising fast. Gold futures hit a new high Wednesday, and silver prices are up over 27% this year alone. [Gold, Silver ETFs Sparkle As Metals Hit New Highs.]

Market Vectors Gold Miners (NYSEArca: GDX) is up 5.3% this week, and so far prices are drifting just below its 52-week high, reports NASDAQ. Spot silver hit a 31-year peak of $39.64 on Wednesday and it is currently trading at $39.58 an ounce. Global X Silver Miners (NYSEArca: SIL) is up 7.5% over the past week. [Silver ETFs Outshine Gold.]

Both ETFs pared early gains Thursday after opening higher by more than 1%.

Miners see their profit margins increase when gold and silver prices are high. Miner ETFs are an alternative for investors who aren’t interested in physically-backed or futures-based options.

GDX invests in the companies that search for and extract the gold from the ground.  Basically it costs the same to pull gold out of the ground, no matter how much the price of gold is  – so miners profit with the higher price.

Mining ETFs differ from physical and futures-based ETFs in that they invest in the companies related to the extraction and production of the metals. They are not directly impacted by spot prices or futures contracts.

Investor interest in precious metals and the miners keeps gaining traction as the unrest in Libya continues to lure capital to safe havens. The disaster in Japan is also a large factor in the demand for physical investment.

Other miners ETFs include:

  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ) up 6.5% over the past week
  • Global X Gold Explorers (NYSEArca: GLDX) up 5.1% over the past week
Market Vectors Gold Miners
For full disclosure, Tom Lydon’s clients own GDXJ.
Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.