Gold traders can directly access the precious metals through exchange traded funds. But for those seeking to gain exposure to the supply side, there are a few gold miner ETFs available.
Gold miner ETFs have been terrible performers versus bullion in recent years with many investors opting for the metal itself rather than producer stocks. However, gold miner shares as a group are attractively valued against bullion on an historical basis.
Market Vectors Gold Miners ETF (NYSEArca: GDX) is the largest of the gold miner funds, with $8.0 billion in assets. GDX has a heavier tilt toward large-cap gold producers, with holdings like Barrick Gold Corp. (NYSE: ABX) at 14.3% and Goldcorp Inc. (NYSE: GG) at 13.1%. Additionally, 62% of the holdings are based from Canada, followed by 16.2% from the U.S. and 12.6% from South Africa. The fund has a 0.52% expense ratio. [Tom Lydon on FOX Business: Gold Miners on the Rise?]
Daniela Pylypczak for Commodity HQ suggests that GDX is an optimal trade for those seeking a liquid play on the gold mining sector. According to Morningstar, the ETF has an average trading volume of 14.3 million and a bid/ask spread of 0.02%.
Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) is the only ETF available that focuses on junior, or small-cap, miners. Although, it should be noted that 15.2% of the fund is comprised of mid-cap gold miners and the rest is in small-cap stocks, and some of the companies are also involved in silver operations. Top country allocations include Canada 58.5%, Australia 26.6% and the U.S. 5.3%. The investment comes with a 6.23% yield and a 0.56% expense ratio. [ETF Chart of the Day: Gold Miners]
The iShares MSCI Global Gold Miners Fund ETF (NYSEArca: RING) is the main competitor to GDX. RING also leans toward large-cap stocks, with Barrick Gold accounting for 14.2% of the fund and Goldcorp making up 12.4% of the portfolio. However, this ETF has wider global reach, with 13.6% of holdings from the greater Asia region and 19.6% from Europe, Africa and the Middle East. RING has an expense ratio of 0.39%.