In the latest sign that gold miners equities and the related exchange traded funds could be ready to offer significant near-term upside, the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSEArca: GOAU) is up more than 5% over the past month.
The U.S. Global GO GOLD and Precious Metal Miners ETF is a smart beta fund that “provides investors access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means,” according to U.S. Global Investors.
The underlying U.S. Global GO GOLD and Precious Metal Miners Index uses quantitative analysis to pick stocks, with a particular focus on royalty companies. The GO GOLD and Precious Metal Miners ETF tries to reflect the performance of the U.S. Global Go Gold and Precious Metal Miners Index, which is comprised of U.S. and international companies that earned at least 50% of their aggregate revenue from precious metals and categorizes components into four “tiers” of precious metals companies based on certain fundamental factors.
Considering Catalysts for Gold
Gold miners are trading at significant discounts to broader equity benchmarks.
“Compared to the broader equities market, gold mining stocks, as measured by the NYSE Arca Gold Miners Index, look incredibly ‘marked down’ right now,” according to U.S. Global research. “They’re far below the average gold miners-to-S&P 500 ratio of 0.7 for the nine-year period, and nearly as undervalued as they’ve ever been.”
Related – 10 Gold ETFs: Is it Time to Go for Gold?