With gold futures back above $1,300 an ounce and large-cap gold miners rebounding in significant fashion, mining ETFs such as the Market Vectors Gold Miners ETF (NYSEArca: GDX) and the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT), the leveraged equivalent of GDX, are drawing plenty of attention.
The allure of NUGT is understandable. Gold miners are a volatile group to begin with and they jump, the moves can be stunning. For example, GDX moved above its 50-day moving average for the first time in nine months Monday, enough to send the ETF higher by 6.1%. NUGT soared more than 18% and is now up a jaw-dropping 40% in the past week. [Gold Mining ETF Above 50-Day Moving Average for First Time in 9 Months]
It is hard to compete with a move of 18% in a single trading day or 40% in a week, but investors looking for big-move potential without leverage have options with small-cap gold mining ETFs. The most popular ETF in this group is the $1.3 billion Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ). During gold’s recent swoon, GDXJ was beaten up so severely that Market Vectors announced a 1-for-4 reverse split for the ETF son June 24. [Market Vectors to Reverse Split 7 ETFs]
That split went into effect on July 1 and since July 2, GDXJ is up 18.4%. Proving the ETF offers an alternative to GDX with a bit more horsepower without the risks of leveraged funds. GDXJ jumped almost 9% on Monday on volume that was nearly 80% of its daily average.
Another example of small-cap mining ETF on the rise is the unheralded Global X Junior Miners ETF (NYSEArca: JUNR). JUNR is small compared to GDXJ (just $4.7 million in assets under management), but the Global X is following its larger rivals higher with a one-month gain of 10.5%.
Like GDXJ, JUNR has performed admirably in the wake of a reverse split. Global X announced a 1-for-3 reverse split of the ETF in May. JUNR has a heavy non-U.S. bias with the U.S. accounting for just 17.6% of the ETF’s country weight. Canada and Australia combine for over 63%.
Market Vectors Junior Gold Miners ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of NUGT.