The VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) and related small-cap gold miners exchange traded funds have come under significant pressure in recent weeks after being among the hottest performers through much of this year.
For gold bugs, the good news is that some investors see value in gold ETF and are buying these funds after the yellow metal’s recent decline.
Improving economic data has increased bets that the Federal Reserve could hike interest rates as soon as December, which would weigh on gold ETFs, particularly if a rate hike spurs the dollar higher.
“Fortunately for those in the junior space, the juniors continue to look better than the gold majors. While most of the gold majors are trading below their 200-day moving averages, several of the juniors are still fighting to hold onto them,” according to a Seeking Alpha analysis of GDXJ.
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For traders looking to be bearish on gold or gold miners, there are plenty of credible plays in the world of ETFs.
The ProShares UltraShort Gold (NYSEArca: GLL) provides a two times inverse or -200% daily performance of gold bullion. Alternatively, ETN options include the DB Gold Double Short ETN (NYSEArca: DZZ), which tries to generate the twice inverse or -200% return of the daily performance of gold; DB Gold Short ETN (NYSEArca: DGZ), which tries to reflect the inverse of gold price movements; and VelocityShares 3x Inverse Gold ETN (NYSEArca: DGLD), which tries to reflect the performance of three times the inverse or -300% daily performance.
Investors bet against gold miners with bearish options like the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST), the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST) and ProShares UltraShort Gold Miners (NYSEArca: GDXS). The Direxion options take the -300% exposure to large miners and junior miners, respectively, while the ProShares option take the -200% exposure to large miners and junior miners, respectively.
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“I believe we have seen the worst for gold and are near the bottom, but if I’m wrong the junior producers are a safer bet. While some of the gold juniors will be taken out no matter what the gold price due to having world class gold projects, the junior producers are de-risked,” adds Seeking Alpha.
For more information on the gold bullion market, visit our gold category.
VanEck Vectors Gold Miners ETF
