Almost as quickly as gold and gold mining equities shot up last Wednesday after the Federal Reserve said it will not taper its bond-buying program, the gains evaporated. By the time the closing bell sounded Friday, the Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest gold mining ETF by assets, finished with a weekly loss of 1.1%.
GDX’s small-cap equivalent, the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ), was far worse with a loss of about 4%. GDXJ’s lagging of its larger cousin came as GDX saw inflows of $1.03 billion for the week ending Thursday September 19, according to Hard Assets Investor.
That made GDX the best asset-gathering ETF, although investors pulled cash from the fund on Friday, leaving GDX with $7.7 billion in assets under management as of September 20, according to Market Vectors data.
Since GDXJ is the small-cap play of the pair, it is not surprising that it sometimes lags GDX. Gold mining stocks are volatile and during periods of stress for the sector, higher beta small-caps often endure more punishment than their large-cap brethren. Over the past month and six months, GDXJ has performed noticeably worse than GDX. [Crunch Time for Gold ETFs Again]
GDXJ is also decoupling on the downside from its two largest country weights, Canada and Australia. Over the past month, the IndexIQ Canada Small-Cap ETF (NYSEArca: CNDA) is up more than 2% while the IndexIQ Australia Small-Cap ETF (NYSEArca: KROO) is higher by more than 7%. Those countries combine for 80% of GDXJ’s country weight.