While gold bullion has somewhat weakened this year, gold miner stocks and related exchange traded have taken a dive, leading some traders to believe that the industry may be oversold.
Year-to-date, the SPDR Gold Shares (NYSEArca: GLD) has dipped 3.0%. Meanwhile, the Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest and most heavily traded gold miners ETF, declined 11.3% and Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) fell 7.6%. Additionally, the Sprott Gold Miners ETF (NYSEArca: SGDM), the first factor-based gold miners ETF, plunged 15.7% so far this year while the small-cap equivalent, the Sprott Junior Gold Miners ETF (NYSEArca: SGDJ), has decreased 12.0% over the past three months.
On the other hand, bearish bets on the gold miners have been shining.
Over the past three months, the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) jumped 64.4%, the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST) surged 24.5%, ProShares UltraShort Gold Miners (NYSEArca: GDXS) gained 41.4% and ProShares UltraShort Junior Miners (NYSEArca: GDJS) increased 19.4%.
After the drop-off this year, gold mining stocks are now the cheapest relative to gold bullion since at least the 1980s, reports Isaac Arnsdorf for Bloomberg.