Shield Against Volatile Gold Prices with Two Miner ETFs

Gold prices came tumbling down during Tuesday’s trading session, but investors can shield against the volatility with gold miner ETFs from Sprott.

Miners can give investors exposure to gold without the price volatility of investing in the precious metal itself. A strong pair of funds to consider are the Sprott Gold Miners ETF (SGDM) and the Sprott Junior Gold Miners ETF (SGDJ).

“Gold prices moved lower but bounced from session lows and closed above trend line support,” an FX Empire report noted. “The yellow metal faced headwinds as the dollar rallied. U.S. Yields were mixed as the 10-year attempted to move higher.”

Per SGDM’s fund description, the ETF seeks investment results that correspond generally to the performance of its underlying index, the Solactive Gold Miners Custom Factors Index. The Index aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges.

This 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

SGDJ seeks investment results that correspond to the performance of its underlying index, the Solactive Junior Gold Miners Custom Factor Index. The index aims to track the performance of “junior” gold companies primarily located in the U.S., Canada, and Australia whose common stock, American Depositary Receipts (ADRs), or Global Depositary Receipts (GDRs) are traded on a regulated stock exchange in the form of shares tradeable for foreign investors without any restrictions.

Mixed Messages in the Market?

Where gold goes from here currently depends on who you ask. The Federal Reserve’s stance on raising interest rates is to do so later rather than sooner, but others are interpreting the message differently.

“The markets appear increasingly unsettled by the Fed’s taboo on inflation, with a growing number of investors taking a net view that the central bank’s ambiguity, mixing a new hawkish stance with dovish declarations from some officials, will ultimately translate into higher interest rates sooner than previously expected,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a Tuesday note.

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