The VanEck Gold Miners ETF (NYSEArca: GDX), the benchmark bullion miners ETF, surged nearly 40% last year as the yellow metal rallied and as miners shored about their balance sheets. Some investors believe miners offer additional upside this year.

In its “10 ETFs for 2020” forecast, ETF strategist Astoria Advisors included GDX, the largest miners ETF.

“Astoria is focused on risk-adjusted, after-tax, and after-inflation returns which is why our dynamic ETF portfolios include alternatives, commodities, and specific portions of the bond complex (i.e. those which have lower correlations to stocks),” said the strategist.

GDX is one of two commodities ETFs on Astoria’s 10 for 2020 list with the other being the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (NYSEArca: COMB).

GDX is comprised of global gold miners, with a notable tilt toward Canadian and U.S. mining companies. Stock fundamentals like cost deflation across the mining industry, share valuations below the long-term average and rising M&A are all supportive of the miners’ space as well.

Going With GDX

With the U.S. dollar weakening, dollar-denominated assets, such as gold, should benefit and as for gold prices, GDX should participate in that upside.

The precious metals mining industry has also been on the road to improved efficiency as they cut costs, increase production and raise more money. Supporting the bullish thesis for ETFs such as GDX is that many gold miners are finding ways to boost output while keeping a lid on costs.

Astoria is forecasting an uptick in inflation over the coming decade, an economic scenario that typically benefits hard assets, including gold.

“The current low-inflation environment may be unjustifiably penalizing commodities as a long-term inflation hedge,” notes S&P Dow Jones Indices. “Inflation can be notoriously difficult to forecast, and market participants can experience an inflation shock before inflation expectations are adjusted upward. Inflation across the major global economies has been in a coma for many years, and negative bond yields would suggest that few investors have inflation at the top of their list of worries heading into the New Year.”

Related: A Pleasant Surprise Among Emerging Markets ETFs in 2019 

As inflation begins to pick up against the backdrop of economic growth, investors may want to think about ways to protect their investments against lower real returns. Consequently, one should consider allocations to assets expected to perform well when inflationary pressures rise

“We’ve consistently included gold in our ETF portfolios for several years due to their low correlation to stocks, low opportunity cost, and elevated recession risks in 2018/2019,” said Astoria. “As noted above, we think inflation risks remain underpriced.”

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.