Year-to-date, precious metals mining exchange traded funds, such as the VanEck Vectors Gold Miners ETF (NYSEArca: GDX) and the Global X Silver Miners ETF (NYSEArca: SIL) are setting scorching paces. In fact, nearly all of the top non-leveraged ETFs on a year-to-date basis in terms of percentage gains are gold and silver mining funds.
There are other mining and materials ETFs that combine exposure to precious metals miners with allocations to base metals producers and those funds are soaring as well. That group includes ETFs such as the iShares MSCI Global Metals & Mining Producers ETF (NYSEArca: PICK) and the SPDR Metals & Mining ETF (NYSEArca: XME).
In fact, XME can be seen as an ETF that has been at the right place at the right time this year due to its exposure to steel and gold mining equities. Steel is finally making a comeback after years of underperforming. For instance, SLX has shown an average 15.0% annual decline for the past five-years while XME returned an average negative 19.9%. The slowdown in China was the main culprit in dragging on the steel sector, reports Abigail Stevenson for CNBC. The weaker economy translated to a diminished demand for steel.
Related: Tactical ETF Strategies for the Miners Trend
Additionally, Beijing was subsidizing its steelmakers with cheap loans, allowing Chinese companies to produce steel on the cheap, which were then dumped in to global markets. In March, steel exports from China surged to 9.98 million metric tons, up 30% to their highest level in a year, according to Bloomberg.
[related_stories]XME is up about 47% year-to-date and that is enough for some technical analysts to ponder whether or not the ETF is ready for a near-term pullback.
“XME has already pulled back 15% from its recent high and poked up against its 50-day moving average. Given our broader market view, it would be surprising to see XME make new highs before pulling back more sharply, essentially in-line with the recent options market activity,” said MKM Partners in a note posted by Teresa Rivas of Barron’s.
Related: Tread Carefully With Gold Miners ETFs
The mining sector retreated along with the metals commodity Monday after China, the world’s largest consumer of raw materials, revealed exports dipped by 1.8% in April, compared to expectations of a 0.1% fall, and imports slumped 10.9% year-over year, compared to projections of a 5% contraction, CNBC reports.
Earlier this year, China announced the largest layoff in history as part of a shifting economic model to focus on domestic demand. The layoffs, though, could provide some relief to the beleaguered global steel industry and sector-related exchange traded funds.
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SPDR Metals & Mining ETF
