The current volatility in gold prices masks the profits earned by miners during the second quarter. It’s an astounding feat given the way gold has been behaving as of late.
“As pandemic-related measures have begun to ease in much of the world, gold miners have seen profits rise amid ramping-up production and increased precious-metals prices, but analysts are torn on the longevity and forces behind the trends,” a MarketWatch report noted. “Gold mining giant Newmont Corp. said attributable gold production rose 15% in the second quarter to 1.45 million ounces, contributing to a nearly doubled profit in the period.”
Gold prices weren’t for the weak at heart during the second quarter when it came to price stability. The fluxing up and down may have shaken some gold investors into selling their positions.
“Gold had a volatile second quarter, with a ride up from the mid-$1,700 an ounce-level peaking at the $1,900 an ounce level in early June and then retracing back to the $1,770 an ounce level by the end of the quarter,” according to a report by Canadian bank CIBC.
Snagging Exposure to Gold Miners
One way to get gold miner exposure is the Sprott Gold Miners ETF (SGDM). The ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges.
The index uses a transparent, rules-based methodology that is designed to emphasize larger-sized gold companies with the highest revenue growth, free cash flow yield, and the lowest long-term debt to equity. The index is reconstituted on a quarterly basis to reflect the companies with the highest factor scores.
Another option is the Sprott Junior Gold Miners ETF (SGDJ), which tracks small cap gold mining companies, focusing on small companies with strong revenue growth and price momentum. Both of these factors have historically predicted long-term stock performance.
The portfolio, which holds roughly 30 to 40 stocks at any given time, tracks the Solactive Junior Gold Miners Custom Factors Index. It is rebalanced semi-annually, ensuring that it reacts to seize opportunities in a timely fashion and keeps its holdings optimized.
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