Why Junior Gold Miners ETF Shines | ETF Trends

This year has been all about gold, gold, gold. In an asset class that’s booming, what has set the junior gold miners exchange traded fund (ETF) apart from the pack?

It’s been a great year for gold miners.

Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) is the ETF for junior miners and in particular junior gold companies. Those small companies have been very strong in 2010 and the ETF has solidly outperformed its larger counterpart, Market Vectors Gold Miners (NYSEArca: GDX); it’s up 52.1% year-to-date, while GDX is up 28.3% in the same time period. [4 Reasons Gold Is Still a Popular Bet.]

Gold miners are hot for several reasons:

  • Simply because they mine a hot product. Gold’s price is near records, giving miners both big and small solid profit margins.
  • There’s demand for more gold, keeping these guys busy to meet it.
  • Smaller gold companies are often acquisition targets for the larger ones. Big companies can’t ramp up production as easily, so it’s often just easier to buy a new one.

Jordon Roy-Byrne for Minyanville says the gold bull market is going to be around for some time, with corrections revealing fresh opportunities. [ETF Spotlight: Market Vectors Junior Gold Miners.]

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.