Three of this year’s 10 best non-leveraged exchange traded funds are gold miners funds, which is to say those ETFs are outpacing physically-backed bullion funds in a big way.

Over the past three months, the Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest gold miners ETF, is up 12.1% while the SPDR Gold Shares (NYSEArca: GLD) is higher by just 1.2%. GLD is the world’s largest gold ETF. Some analysts believe investors can bet continued out-performance by the miners. [Gold Miners ETFs Ready for Another Rally]

“With gold mining stocks trading at a 58% discount to 2011 levels, gold miners’ shares remain highly undervalued relative to fundamentals in our view. Although reserve depletion is an issue that still needs to be addressed for sustainable long-term growth of the sector, cost management has substantially improved miners’ profitability. With global growth finally starting to gain momentum and seasonality of gold demand historically buoying gold miners’ shares in the third quarter, we believe now may be a good time to raise exposure to gold miners. We maintain our positive view on gold miners and target broad miner valuations to move back to around 2x book value over the next few months,” said ETF Securities in a new research note.

With regards to seasonality, gold is in the midst of one of its stronger seasonal periods, which started on July 12 and lasts through Oct. 9. GDX and GLD have traded lower since July 12, but since the start of the third quarter, GDX is up 2%.

GDX has lost $100.3 million this quarter, but that does not mean investors are fleeing miners ETFs. The ETF has added $120.3 million in just the past week while the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has added almost $309 million in the current quarter. [Obscure Ratio Points to More Upside for Junior Miners ETF]

ETF Securities sees significant upside ahead.

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