Gold miner ETFs have been brutal to investors for years, sort of a falling knife and a value trap wrapped into one.
The sector has trended lower since late 2011 despite some violent rallies along the way.
Market Vectors Gold Miners ETF (NYSEArca: GDX) rallied more than 4% on Wednesday after dropping to levels last seen in 2009.
Trying to time a bottom in gold miners in recent months has been a total disaster as bullion prices also decline. But with sentiment in the toilet and an interesting technical setup, this could be the long-awaited bounce for gold miners.
Indeed, gold mining companies are trying to lure exasperated investors with more cost disclosure. [Gold Miner ETFs Hit Multiyear Lows vs. Bullion]
From a technical perspective, gold miners need to make a stand here, says Chris Kimble at Kimble Charting Solutions. He notes an index of gold mining stocks has dropped to a 10-year support line as well as a so-called Fibonacci retracement level.
Turning to physical gold, bullion has not glittered as brightly as it has in the past, but physical gold looks resplendent when compared to gold miner stocks and related exchange traded funds such as GDX.
Equities have rallied 21% after bottoming in June 2012, writes Ashraf Laidi for City Index, but gold bullion has declined 1% over the same period and the Gold Bugs Index, which tracks 16 popular gold mining firms, declined 20%. [Gold Miners Target Investors as ETFs Hit Multiyear Lows vs. Bullion]
SPDR Gold Shares (NYSEArca: GLD) is down 6.9% over the past year, compared to a 31.8% decline over the same period for GDX, the miner ETF.
From the September high, the Gold Bugs Index fell 31% while physical gold lost 13% from its October high.