An ETF tracking gold mining companies has gathered nearly $2 billion so far this month as investors try to time a bottom in the embattled sector.
Traders are also using leveraged ETFs in an attempt to profit from moves in volatile miner stocks.
Market Vectors Gold Miners (NYSEArca: GDX) is one of the top-selling ETFs in September with inflows of more than $1.7 billion, according to IndexUniverse.
GDX saw record one-day trading volume on Wednesday after the Federal Reserve surprised markets with a decision not to taper its bond and mortgage purchases. The gold miner ETF rallied 9% for the session and was actually in the red before the Fed announcement.
Trading activity in GDX recently has been “dead on in terms of direction,” says Paul Weisbruch at ETF liquidity provider Street One Financial. For example, the fund saw inflows of $500 million earlier this week before Wednesday’s big rally. There was also an increase in call option activity before the Fed announcement, he added.
Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) have also seen trading activity ramp up this week.
NUGT is a 300% leveraged ETF for the sector. The fund saw record trading volume on Wednesday and rallied nearly 28%. DUST is the bearish counterpart and experienced the second-highest volume day in its history on Wednesday. [Gold Miner ETFs: ‘Raging Bulls and Raving Bears’]