An exchange traded fund that invests in gold miners pared its gains Tuesday after an early rally, following the fund’s recent breakout.
Market Vectors Gold Miners (NYSEArca: GDX) was fractionally positive after rallying as much as 3%. Last week, the miners ETF rose to a new 52-week high in its third attempt at this resistance level over the past year.
The fund, which invests in miner stocks rather than gold bullion, was one of the top-performing ETFs in August. [Gold Miners ETF Near All-Time High]
Many gold miners are sitting on large cash reserves and are trading at single-digit price-to-earnings (P/E) ratios, ETFTrends.com’s Tom Lydon told CNBC in a recent appearance. He noted that if miners can extract gold for around $1,000 an ounce and sell it for $800 to $900 an ounce higher, the profitability is “huge.” [Tom Lydon on CNBC: Gold as Momentum Play]
Market Vectors Junior Gold Miners (NYSEArca: GDXJ) is an ETF that invests in small-cap miner stocks. It was down nearly 2% at last check.
ETFs that track gold bullion prices opened higher Tuesday on worries over Eurozone debt and stagnating job growth in the U.S., but fell into the red in recent action Tuesday.
Market Vectors Gold Miners
Full disclosure: Tom Lydon’s clients own GDX.