The VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ), the second-largest exchange traded fund tracking gold miners equities, is lower by 3% over the past week as some of the air has come out of the gold trade, but some market observers believe small-cap miners still offer significant upside potential.

The VanEck Vectors Gold Miners ETF (NYSEArca: GDX) is the largest gold miners ETF. GDX is comprised of global gold miners, with a notable tilt toward Canadian and U.S. mining companies. Nevertheless, gold assets may have further room to rise if the U.S. dollar and real bond yields continue to slump.

“If one were to look at the HUI or GDM (parent index of GDX) it would show the gold stocks are currently behind the rebound that began in the fourth quarters of 2000 and 2008. Data from the BGMI implies the rebound in gold stocks is ahead of schedule. In a broader sense, the BGMI certainly has plenty of room to run as many of its bull markets have achieved 7-fold returns,” according to ETF Daily News.

Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.

The $4.2 billion GDXJ tracks the MVIS Global Junior Gold Miners Index, “which is intended to track the overall performance of small-capitalization companies that are involved primarily in the mining for gold and/or silver,” according to VanEck. The ETF holds 75 stocks.

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