A rally in exchange traded funds that invest in gold miners has carried the sector ETFs close to their all-time highs from late 2010.
Market Vectors Gold Miners ETF (NYSEArca: GDX) is reasserting its relative uptrend against the S&P 500 as the fund eyes a new record relative high, said Tarquin Coe, technical analyst at Investors Intelligence. The ETF was listed in 2006. [Miner, Silver ETFs Pick Up Momentum]
“Last week the ETF’s 50-day exponential moving average rose up through the 200-day exponential moving average, printing a’ golden cross,’ a bullish signal,” Coe wrote in a newsletter Monday. “U.S. debt uncertainties are providing a tailwind to yellow metal related stocks and that should be enough to soon drive the fund beyond the all-time high of $64.62 a share.”
Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) invests in small-cap miner stocks.
The miner ETFs have been getting a boost lately from rising gold prices. [Debt Uncertainty Drives Investors to Gold ETFs]
“Gold is the trade which continues to work in the current climate. Long-term it has done likewise, trumping all other classes for the past several years,” Coe wrote. “Today, SPDR Gold Shares (NYSEArca: GLD) has broken out to a new all-time high as SPDR S&P 500 (NYSEArca: SPY) flounders beneath its 2011 highs. A resolution to the U.S. debt ceiling talks will no doubt cause respective reversals in both these instruments, with a correction in GLD and a break higher by the SPY.”
The analyst, meanwhile, called miner stocks “perhaps a middle-of-the-road compromise.”
Full disclosure: Tom Lydon’s clients own GLD and GDXJ.
The opinions and forecasts expressed herein are solely those of John Spence, 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.