Traditional gold-backed exchange traded funds are up 8% this year, but gold miners ETFs are lagging.
For example, the VanEck Vectors Gold Miners ETF (NYSEArca: GDX), the largest exchange traded fund dedicated to gold mining stocks, is up just 4% year-to-date while the VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) is lower by more than 3%.
Stock fundamentals like cost deflation across the mining industry, share valuations below long-term average and rising M&A are all supportive of the miners space as well, but those fundamentals could be glossed over if the dollar strengthens.
“Many mining companies were able to put in strong corporate performance and generate cash relative to the gold price. Gold did better in the face of a strong U.S. dollar than many believed and has outperformed the gold equities. This coupled with good corporate performance, and low expectations will likely lead equities higher in 2018,” according to ETF Daily News.
The yellow metal has recently been pressured by, among other forces, a slight uptick in the previously sliding U.S. dollar and expectations that the Federal Reserve will raise interest rates for the third time this year at its December meeting.