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Digging Into Gold Mining ETF GDX

By  +Follow December 6, 2013 8:22AM
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A quick look at the most actively traded ETFs by average volume provides no surprise for the top name: the SPDR S&P 500 ($SPY) moves and average of 111 million shares a day. Coming in right behind it is the iShares MSCI Emerging Markets Index ETF (EEM) , also a predictable entry. However, some might be a touch surprised to see the ETF with the third-highest average daily volume: the Market Vectors Gold Miners ETF ($GDX).

While the majority of the ETFs traded the most actively are very broad, covering large swaths of the global economy, the GDX is much more specific, focusing entirely on one segment (gold) or one industry (mining). As such, GDX stands out for being an unusually narrow entry into the ETF category to attract so much attention.

Just Another Gold Play?

It’s not hard to see the main reason why GDX is so popular: gold. Gold bugs are notoriously voracious, and gold always seem to spark the imagination of investors across the globe. And, while gold investing usually takes the form of buying (or shorting) commodities and futures contracts, the GDX is a way to indirectly speculate on the price of gold while still using the familiar vehicle of an equities ETF. A quick comparison of gold spot prices and shares in GDX show that the value of GDX tends to mirror movements in the price of gold.

However, that’s not the whole story. Over the last year, movements in the spot price of gold are generally closely matched by shifts in GDX, but they tend to be magnified for GDX. And, taking it a step further, looking back of 5 years shows a pretty clear correlation between the two, but with the GDX showing considerably more independence. The GDX was more volatile while on the rise during 2009 and 2010, then fell much further when gold prices started their extended plunge in September of 2012. Over the last year, the price of gold lost about a quarter of its value, while GDX is off over 55 percent.

What’s in GDX?

So while investing in GDX is, in many ways, a proxy for investing in the price of gold, it’s not a perfect match. Mining stocks tend to experience swings in the price of gold more violently, rising higher and falling farther than the precious metal. They can also exhibit much greater volatility.

Anyone planning an investment into GDX should probably do their research, as a result. Because GDX is comprised of stocks in 37 different gold-mining companies, many of the fluctuations based on the situations of individual companies are evened out. However, that doesn’t mean that there aren’t a handful of major players that can greatly affect the ETF.

The GDX tracks the NYSE Arca Gold Miners Index. It has five different companies that consist of 5 percent of holdings or more. They are Goldcorp (GG) with 11.7 percent, Barrick Gold Corp. (ABX) with 10.56 percent, Newmont Mining Corp. (NEM) with 8.06 percent, Randgold Resources (GOLD) with 5.05 percent, and Yamana Gold (AUY) with 5 percent.

And Did You Say Dividend?

Perhaps one of the most important considerations, though, in investing in GDX instead of gold would be the ETF’s dividend yield currently sitting at just under 2.25 percent. Simply put, buying commodities or futures doesn’t pay a dividend. Owning gold means just that: you own gold. And that gold doesn’t care how you feel about any of it.

A gold mining company, though, has to treat you like it would any other shareholder. You own a piece of that company, and you share in its profits. As such, while you’re still susceptible to fluctuations in the price of gold, it’s a lot easier to hang onto a dividend stock through hard times than it is physical gold.

Gold Miner ETF is a Different Kind of Gold Play

Ultimately, like any mining stock ETF, GDX is tied tightly to the price of gold. However, that doesn’t mean that it’s simply another way to bet on the price of gold. The existence of a dividend, greater volatility, and a composition made up of several different companies each with their own individual circumstances makes GDX its own beast.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for gdx
Emylers
3 Sep 15 18:30:34
AAPL Apple, Inc. News http://t.co/8rWLA1DuuJ $AAPL $XLY $GDX $RPV #AAPL #tradeideas #finance
HEDGE FUND$ STRAT€G¥
3 Sep 15 18:00:45
RT @gtlackey: Basic Materials BC $XLB $GDX $XME there isn't a chemical ETF... oh well http://t.co/HgZXGhfhXr
GTLackeyJr CMT
3 Sep 15 18:00:17
Basic Materials BC $XLB $GDX $XME there isn't a chemical ETF... oh well http://t.co/HgZXGhfhXr
Chris Barcelo
3 Sep 15 17:42:29
Excellent Marc Faber video. $jnug $jdst $gdx $gdxj $nugt $dust #gold https://t.co/O2MuVdbNKq
Miningfinance
3 Sep 15 17:30:41
RT @goldminerpulse: 3 Sep - #gold #etf $ flows: $GDX +$14.8M. $GDXJ and $GLD unchngd. SGE was closed for Victory day. https://t.co/BbrotmK…
GoldMinerPulse
3 Sep 15 17:14:47
3 Sep - #gold #etf $ flows: $GDX +$14.8M. $GDXJ and $GLD unchngd. SGE was closed for Victory day. https://t.co/BbrotmKBPl
Anne
3 Sep 15 17:08:22
RT @BakkenShale: Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold ~ http://t.co/ZAiNel2ewO $GS $HSBC $BAC $C $NUGT $GLD $SLV $GDX $DUST…
Top ETF Funds
3 Sep 15 15:59:23
OIH Was the Biggest Gainer among Energy ETFs Last Week.. http://t.co/LvIXtnZ4Yl $GDX #ETF #ETFs #Stocks
Samson Boyd
3 Sep 15 15:58:54
RT @BakkenShale: Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold ~ http://t.co/ZAiNel2ewO $GS $HSBC $BAC $C $NUGT $GLD $SLV $GDX $DUST…
Rich Lemanski
3 Sep 15 15:36:32
RT @BakkenShale: Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold ~ http://t.co/ZAiNel2ewO $GS $HSBC $BAC $C $NUGT $GLD $SLV $GDX $DUST…
Se Bastian
3 Sep 15 14:32:44
RT @TheDailyGold: Precious Metals Sector Video Update: http://t.co/7GPvSdDZXV $GC_F $GLD $GDX $GDXJ $SPY
Greg Curry
3 Sep 15 14:26:19
RT @BakkenShale: Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold ~ http://t.co/ZAiNel2ewO $GS $HSBC $BAC $C $NUGT $GLD $SLV $GDX $DUST…
Zeplik3
3 Sep 15 14:21:58
RT @BakkenShale: Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold ~ http://t.co/ZAiNel2ewO $GS $HSBC $BAC $C $NUGT $GLD $SLV $GDX $DUST…
Official BakkenShale
3 Sep 15 14:20:35
Goldman Sachs And HSBC Buy 7.1 Tons Of Physical Gold ~ http://t.co/ZAiNel2ewO $GS $HSBC $BAC $C $NUGT $GLD $SLV $GDX $DUST $JDST $VIX $SPY
361 Capital
3 Sep 15 13:29:19
Up Moves= Oil + 1.9%, India +1.7%, $VALE +3%, Brazil +1%. Down Moves= Euro -0.9%, Biotech -2%, $FB -2%, $GLD -0.7%, $GDX -1.8%, $AMBA -11%
Top ETF Funds
3 Sep 15 13:22:10
Summer Madness to Nut Case? A Fall Preview of ETFs.. http://t.co/KQsahfzXpN $GDX #ETF #ETFs #Stocks
Top ETF Funds
3 Sep 15 13:21:49
6 ETFs to Watch in September.. http://t.co/V4WOQvl9zI $GDX #ETF #ETFs #Stocks
Min Links
3 Sep 15 13:15:13
Gold: Accumulation With Prudence http://t.co/sqhIeE4BF7 #mining #stocks $GDX $GDXJ $USD #inflation #silver #gold… http://t.co/GZ9KtTBTCX
David Durand
3 Sep 15 13:04:33
$GLD Looks OK for a pullback in a rally, but needs to hold the support level just below here around 107. Otherwise back to the bottom. $GDX
Min Links
3 Sep 15 12:58:55
Gold: Accumulation With Prudence http://t.co/sqhIeE4BF7 #mining #stocks $GDX $GDXJ $USD #inflation #silver #gold… http://t.co/RqJbaUdMAI
Craig Garbers
3 Sep 15 12:51:21
RT @ETFtrends: Inverse Euro ETF Ideas, Talking About the New Refiners Fund, New Defined Maturity #ETFs $SPY $CRAK $GDX $EUFX $IWM http://t.…
Ian Fleming
3 Sep 15 12:48:15
Gold: Accumulation With Prudence http://t.co/ccPzjK4xtr #mining #stocks $GDX $GDXJ $USD #inflation #silver #gold http://t.co/OhBufAxXQ1
ANATHORY
3 Sep 15 12:45:19
RT @mining_metals: Russia says sell the Dollar.. $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT #Russia #banks #futures http://t.co/0g9VW92WoI
Min Links
3 Sep 15 12:41:15
RT http://t.co/ZvS95LLz3M “Gold: Accumulation With Prudence” http://t.co/sqhIeE4BF7 #mining #stocks $GDX $GDXJ… http://t.co/8DgaEnIjye
Trading Derivatives
3 Sep 15 12:40:02
RT @ETFtrends: Inverse Euro ETF Ideas, Talking About the New Refiners Fund, New Defined Maturity #ETFs $SPY $CRAK $GDX $EUFX $IWM http://t.…
Binary Trader Pro
3 Sep 15 12:27:43
RT http://t.co/1ZxRNGkaPa “Gold: Accumulation With Prudence” http://t.co/RHUQcMqY0E #mining #stocks $GDX $GDXJ… http://t.co/L9VZacKCRK
Min Links
3 Sep 15 12:24:33
“Gold: Accumulation With Prudence” http://t.co/sqhIeE4BF7 #mining #stocks $GDX $GDXJ $USD #USDollar #inflation #… http://t.co/DTdIaEp5aa
ETF Trends
3 Sep 15 12:20:50
Inverse Euro ETF Ideas, Talking About the New Refiners Fund, New Defined Maturity #ETFs $SPY $CRAK $GDX $EUFX $IWM http://t.co/TafxJCd187
Mining Metals Market
3 Sep 15 12:18:37
Russia says sell the Dollar.. $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT #Russia #banks #futures http://t.co/0g9VW92WoI
Market Int Center
3 Sep 15 12:17:39
Market Vectors Gold Miners $GDX Trading Near $14.19 Resistance Level ( http://t.co/DMc7zEGkKO )
Miroslav Piták
3 Sep 15 12:07:02
RT @goldminerpulse: 2 Sep - #gold #etf $ flows: $GDX +$16.3M. $GDXJ and $GLD unchngd. SGE premium +$15 & sett. vol 21.09t https://t.co/Bbro…
Quartermaster
3 Sep 15 11:54:15
$nugt $gdx $gld aren't buying today's weakness.
Miningfinance
3 Sep 15 11:36:37
RT @MiningInfo: Date Of Climate Destruction September 23 2015 http://t.co/owRxkKYqtW $NUGT $GLD $SLV $JNUG $UUP $GLD $GDXJ $GDX http://t.co…
Darren
3 Sep 15 11:35:51
RT @MiningInfo: Date Of Climate Destruction September 23 2015 http://t.co/owRxkKYqtW $NUGT $GLD $SLV $JNUG $UUP $GLD $GDXJ $GDX http://t.co…
Sweet Platform
3 Sep 15 11:33:03
GDX Top news - Sep 3rd, 2015 $GDX http://t.co/3yhx95GyPV
Global Metals Market
3 Sep 15 11:28:32
Date Of Climate Destruction September 23 2015 http://t.co/owRxkKYqtW $NUGT $GLD $SLV $JNUG $UUP $GLD $GDXJ $GDX http://t.co/TJzCMVbLlI
Ben C. Banks
3 Sep 15 11:23:58
$GDX (& most of it's holdings) & $SOHU are the two charts that popped out the most to me for short set-ups...
Karim Paul Rajan
3 Sep 15 11:21:15
RT @TheDailyGold: Precious Metals Sector Video Update: http://t.co/7GPvSdDZXV $GC_F $GLD $GDX $GDXJ $SPY
Jordan Roy-Byrne CMT
3 Sep 15 11:09:56
Precious Metals Sector Video Update: http://t.co/7GPvSdDZXV $GC_F $GLD $GDX $GDXJ $SPY
Samir Shah
3 Sep 15 11:06:20
RT @MiningInfo: China is DUMPING Massive U.S> Treasury Bonds $NUGT $GLD $SLV $JNUG $DUST $JDST $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT http:…
Bill Tsamis
3 Sep 15 10:54:55
And it looks like Miners will be bottoming with the general market next week if that analysis is correct $GDX $GDXJ As I said, flips today
Edward Gofsky
3 Sep 15 10:52:52
RT @chart_freak: Public Post@ http://t.co/u4rC2lbVHk $SPX $USD $GLD $GDX $GDXJ $CRB $UWTI $XLE $JNUG $FCX $AKS $STOCKS $DAYTRADE http:/…
max power
3 Sep 15 10:52:17
@zerohedge the lower the px of $GDX the lower the px of gold. $gdx=0 implies gold price of zero because production = 0.
Donald J Olive
3 Sep 15 10:47:08
RT @Briefingcom: Our BlueChip #Trader $BLUEX reviews his weekly trades that included $IWM $BABA $MU $TMUS $GDX $SPY & more. http://t.co/uu7…
shravan kapoor
3 Sep 15 10:39:31
RT @MiningInfo: China is DUMPING Massive U.S> Treasury Bonds $NUGT $GLD $SLV $JNUG $DUST $JDST $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT http:…
Miningfinance
3 Sep 15 10:27:47
RT @MiningInfo: China is DUMPING Massive U.S> Treasury Bonds $NUGT $GLD $SLV $JNUG $DUST $JDST $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT http:…
Or et Argent
3 Sep 15 10:19:07
RT @MiningInfo: China is DUMPING Massive U.S> Treasury Bonds $NUGT $GLD $SLV $JNUG $DUST $JDST $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT http:…
Global Metals Market
3 Sep 15 10:17:05
China is DUMPING Massive U.S> Treasury Bonds $NUGT $GLD $SLV $JNUG $DUST $JDST $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT http://t.co/5oaHLtLqz3
Miningfinance
3 Sep 15 10:15:45
RT @MiningInfo: Russia says SELL the Dollar.. $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT #Russia #banks #futures http://t.co/mO6wgWUIyt
Or et Argent
3 Sep 15 10:14:03
RT @MiningInfo: Russia says SELL the Dollar.. $GC_F $DX_F $UUP $GLD $GDXJ $GDX $NUGT #Russia #banks #futures http://t.co/mO6wgWUIyt
				
				
By  +Follow December 6, 2013 8:22AM
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