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.