Gold miner exchange traded funds stumbled Wednesday along with bullion prices, dragging the stock ETFs to fresh 52-week lows.
Market Vectors Gold Miners (NYSEArca: GDX) fell 3% while Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) was down nearly 4%.
Leveraged ETFs following the sector saw even larger moves Wednesday — NUGT (Direxion Daily Gold Miners Bull 3X) and DUST (Direxion Daily Gold Miners Bear 3X). [ETF Chart of the Day: Gold vs. Miners]
Gold miner ETFs have lagged the price of bullion in 2011 and are set to end the year with losses. [Gold Miner ETFs Look to Catch Up to Bullion in 2012]
Market Vectors Gold Miners was off about 16% heading into Wednesday’s trading, while bullion-backed ETFs such as ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) are up more than 10%.
Other miner ETFs include Global X Silver Miners (NYSEArca: SIL), PowerShares Global Gold and Precious Metals (NasdaqGM: PSAU), Global X Copper Miners (NYSEArca: COPX) and Global X Gold Explorers (NYSEArca: GLDX).
Earlier this year, hedge fund manager David Einhorn said a “substantial disconnect has developed between the price of gold and the mining companies.” [Are Gold Miner ETFs Undervalued?]
Einhorn and other hedge fund stars such as John Paulson and George Soros have been burned by the underperformance of gold miners, The Wall Street Journal reported Wednesday.
“Investors have worried that mining costs are rising, and that governments around the world are becoming more aggressive in taxing resources companies,” the newspaper reported. “They’re also concerned that gold miners might squander any windfall with ill-conceived acquisitions or other moves.”
The small-cap Market Vectors Junior Gold Miners ETF is down about 40% this year.
Yet investors upbeat on the sector note that gold-mining companies are “seeing improving revenues, and that shares are more attractive relative to gold prices, making them bargains that investors eventually will recognize,” according to the WSJ story.
Market Vectors Gold Miners
Full disclosure: Tom Lydon’s clients own GLD.