GDMN: Ideal ETF for Accessing Gold Miner Equities | ETF Trends

Somewhat overshadowed by bitcoin and stocks, gold is enjoying a solid start to 2024. In fact, the largest bullion-backed exchange traded fund is higher by 4.80% year to date.

Predictably, the yellow metal’s ascent is stoking questions about when miners of the precious metal will get in on the act. Those queries are appropriate, with the NYSE Arca Gold Miners Index lower by 3.61% year-to-date. Experienced gold investors have seen this movie before. It airs all too frequently, but some market observers believe there are good reasons miners can join the party. That underscores the utility of the WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN).

GDMN, which debuted in late 2021, is an actively managed ETF. In simple terms, it provides exposure to both gold futures contracts and shares of mining companies. That means investors gain some leverage to upside by spot gold prices while waiting for miners to get on the act.

Good Time to Consider Gold Miners Fund GDMN

GDMN could be a relevant near-term consideration, because the precious metal has multiple tailwinds. For example, some market participants believe the Federal Reserve will not be successful in engineering a soft economic landing. If that thesis proves accurate, the resulting scenario, while dour for risk assets, would likely benefit the metal’s prices.

Whether it’s that reason or others, data confirm traders are moving into the yellow metal. Last week’s data from the Commodity Futures Trading Commission (CFTC) indicate bullish positions in COMEX gold futures surged by 63,018 contracts, good for the largest weekly increase in nearly five years.

Specific to miners, including those residing in GDMN, there’s a compelling valuation case. Fortunately, the stocks aren’t just inexpensive, they’re supported by attractive fundamentals.  Those include increasing capital efficiency and an emphasis on shareholder rewards.

Additionally, GDMN might have some credibility as ESG play because miners have increasingly embraced ESG principles. That could broaden the investor base for this often overlooked asset class.

“As gold gains popularity as an investment asset, miners are increasingly expected to enhance their ESG reporting practices. To avoid errors in sustainability reporting, miners actively track and analyze high-quality ESG data, with strong governance and controls to ensure appropriate signoffs,” according to a recent study by EY.

The consulting firm added that some miners, including some residing in GDMN, are embracing the World Gold Council’s Responsible Gold Mining Principles, which could put those firms in alignment with the UN Sustainable Development Goals.

For more news, information, and analysis, visit the Modern Alpha Channel.