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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
Miningfinance
7 Jul 15 23:11:18
RT @goldminerpulse: #gold #etf money flows 7 July: $GDX added $37.4M.. $GLD and $GDXJ unchanged. #SGE daily settlements remain low. https:…
GoldMinerPulse
7 Jul 15 22:58:32
#gold #etf money flows 7 July: $GDX added $37.4M.. $GLD and $GDXJ unchanged. #SGE daily settlements remain low. https://t.co/XJbRL0fuq6
Edouard
7 Jul 15 22:16:51
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Fredrick
7 Jul 15 22:09:18
RT @etfguide: Yes! We will analyze & grade your #gold portfolio. Start here: http://t.co/3R4VDR7e3Y $GDX $GLD $GDXJ $IAU http://t.co/XmvtsB…
dailystockplays.com
7 Jul 15 22:01:52
Below Bollinger http://t.co/khJxRNjwnt $BAC $GDX $AMD $NUGT $YHOO $ASHR $GDXJ $QIHU $NEM $KEY $GLD $REXX $TBT $LBTYK $ATHM $LBTYA $EWU $JNUG
TrendsInvesting
7 Jul 15 21:54:32
Downward trend on #Materials #ETFs $GDX $XLB $XME - down -8.72% in 16 days - http://t.co/XuTCG1vB8E http://t.co/ua0K1ynel7
sergio teijelo II
7 Jul 15 21:34:35
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Fionnulo
7 Jul 15 21:22:48
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Greg Snider
7 Jul 15 21:21:40
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Afflicted
7 Jul 15 21:09:24
RT @etfguide: Yes! We will analyze & grade your #gold portfolio. Start here: http://t.co/3R4VDR7e3Y $GDX $GLD $GDXJ $IAU http://t.co/XmvtsB…
Elo
7 Jul 15 21:09:15
RT @etfguide: Yes! We will analyze & grade your #gold portfolio. Start here: http://t.co/3R4VDR7e3Y $GDX $GLD $GDXJ $IAU http://t.co/XmvtsB…
Chris Cole
7 Jul 15 21:08:53
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Bullion Baron
7 Jul 15 21:08:40
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
LimitedHangOut
7 Jul 15 21:06:57
RT @MktOutperform: Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Charlie Bilello, CMT
7 Jul 15 21:06:15
Miners not far off from their 2008 lows. 74% decline from their 2011 peak. $GDX http://t.co/lxbH5lgDvr
Ron DeLegge
7 Jul 15 20:35:45
Yes! We will analyze & grade your #gold portfolio. Start here: http://t.co/XfWOLCAnGJ $GDX $GLD $GDXJ $IAU http://t.co/AlEGRaxUAo
Portfolio Talk
7 Jul 15 20:35:45
Yes! We will analyze & grade your #gold portfolio. Start here: http://t.co/fwORlaXCdH $GDX $GLD $GDXJ $IAU http://t.co/MrK7gYSLjL
ETFguide.com
7 Jul 15 20:35:45
Yes! We will analyze & grade your #gold portfolio. Start here: http://t.co/3R4VDR7e3Y $GDX $GLD $GDXJ $IAU http://t.co/XmvtsBAof8
Stock Rocket
7 Jul 15 20:32:21
Our Penny Stock Newsletter Alerts Gained 200% In 2 Weeks! Get Our Next Pick Early: http://t.co/4eX1MHBloV $MDMT $COHO $GDX
Michael James
7 Jul 15 20:04:30
Our Stock Alerts On $GEQU Gained As Much As 83.33% For Our Members, In the Past 5 Days! Big News: http://t.co/121SdGPPTC $PZG $APOG $GDX
James DiPlata
7 Jul 15 19:17:55
RT @tradewithjoe: Joe's favorite stock trading reports. $SPY $QQQ $DIA $IWM $GLD $GDX $AAPL $TSLA $USO $FB $TWTR $BABA $YHOO $UUP - http://…
Market Masta
7 Jul 15 19:06:27
#Gold channel and targets $GLD $GDX $GDXJ http://t.co/YX2iywTpxk
Penny Stockington
7 Jul 15 19:04:03
$SUTI Has Gained 66.67%, Since Our Penny Stock Blog Alert! Huge News: http://t.co/llIxl7cUOL $PZG $APOG $GDX
Edward Gofsky
7 Jul 15 18:58:18
"@crosshairtrader: $GLD in a WEEKLY box along down trends. Watching." Great Chart $GDX $NUGT $DUST http://t.co/QctoStG4Hl
زياد العتيبي
7 Jul 15 18:56:47
$GDX $GLD $NUGT Testing key resistance levels- make or break for uptrend
GTLackeyJr CMT
7 Jul 15 18:53:08
July 7, 2015 RS Movers http://t.co/d2X4v3SFi3 $VOO $PWV $FYX $VBR $PEJ $XLU $GDX $XES $INCY $CAMP $EBAY $ALK $HST $CME $LVS $S $HES
Gulfstream | Huck
7 Jul 15 18:42:02
@FordWealth @MarkYusko only a matter of time until it reverts to the mean $GDX $GLD
Stock Rocket
7 Jul 15 18:40:26
Our Penny Stock Newsletter Alerts Gained 200% In 2 Weeks! Get Our Next Pick Early: http://t.co/4eX1MHBloV $PZG $APOG $GDX
tradewithjoe
7 Jul 15 18:34:18
Joe's favorite stock trading reports. $SPY $QQQ $DIA $IWM $GLD $GDX $AAPL $TSLA $USO $FB $TWTR $BABA $YHOO $UUP - http://t.co/ohq218DujR
Stock Dawgzz
7 Jul 15 18:34:11
Our Platinum Subscribers Saw Their Penny Stock Alerts Gain Over 200% In 2 Weeks! Big Update: http://t.co/Lhta1yqlzk $PZG $APOG $GDX
Michael Cook
7 Jul 15 18:30:56
$GEQU Nearly Doubled For Our Platinum Members In 5 Days! Subscribe To Get Our Next Pick Early: http://t.co/seztEzzI8Y $MDMT $COHO $GDX
Michael James
7 Jul 15 18:29:44
Our Stock Alerts On $GEQU Gained As Much As 83.33% For Our Members, In the Past 5 Days! Big News: http://t.co/121SdGPPTC $MDMT $COHO $GDX
Penny Stockington
7 Jul 15 17:51:15
$SUTI Has Gained 66.67%, Since Our Penny Stock Blog Alert! Huge News: http://t.co/llIxl7cUOL $MDMT $COHO $GDX
IH NASDAQ OMX
7 Jul 15 17:50:32
XLY Exxon Mobil Corp. E.P.S. http://t.co/hbisZTIun1 $XLY $GDX $VALE $CELG #XLY #finance #stock
leahanne
7 Jul 15 17:48:03
VTI iPath S&P 500 VIX Short-Term Futures ETN 52Wk High http://t.co/TAVMPJm1JY $VTI $GDX $EEM $BAC #VTI #finance #stockmarket
Edward Gofsky
7 Jul 15 17:44:56
"@TopDownTechnicals: $GLD $GDX $JNUG $NUGT Gold close to breaking support and officially establishing LT downchannel" http://t.co/PMjx1ULAuf
TylerSoliday
7 Jul 15 17:43:28
RT @IHNewsDesk: GLD SPDR Gold Trust Shares 52Wk High http://t.co/fwM93TzP5x $GLD $GDX $ENRT $IPCI #GLD #investing #invest
Rosner Stocks
7 Jul 15 17:41:38
NEM Newmont Mining Corp. Exchange http://t.co/3UY6sJ3VKT $NEM $IYR $GDX $MBLY #NEM #tradeideas #pennystocks
Investors Hangout
7 Jul 15 17:39:11
IBM International Business Machines Yield http://t.co/BK5Mq5I6Ex $IBM $VALE $IYT $GDX #IBM #stocks #tradeideas
Investors Hangout
7 Jul 15 17:37:35
GOOGL Google Inc. - Class A % Change http://t.co/Lyg1jOsng2 $GOOGL $BND $JNK $GDX #GOOGL #stockmarket #tradeideas
IH News Desk
7 Jul 15 17:37:06
GLD SPDR Gold Trust Shares 52Wk High http://t.co/fwM93TzP5x $GLD $GDX $ENRT $IPCI #GLD #investing #invest
IH NASDAQ OMX
7 Jul 15 17:36:33
GDX Market Vectors Gold Miners Volume http://t.co/eQMgl0km3s $GDX $SREV $XLY $PCLN #GDX #pennystocks #investing
Stock Rocket
7 Jul 15 17:29:18
Our Penny Stock Newsletter Alerts Gained 200% In 2 Weeks! Get Our Next Pick Early: http://t.co/4eX1MHBloV $MDMT $COHO $GDX
Stock Dawgzz
7 Jul 15 17:19:20
Our Platinum Subscribers Saw Their Penny Stock Alerts Gain Over 200% In 2 Weeks! Big Update: http://t.co/Lhta1yqlzk $MDMT $COHO $GDX
nasdaqfan
7 Jul 15 16:43:04
PVSP Pervasip Corp. Ask Size http://t.co/WbnuwgvyVV $PVSP $WMIH $GDX $UNP #PVSP #investing #stockmarket
Rosner Stocks
7 Jul 15 16:37:07
GLD SPDR Gold Trust Shares Ex-Div Date http://t.co/IIlaFXNQef $GLD $GDX $JPM $OIL #GLD #investing #tradeideas
danrocks
7 Jul 15 16:36:34
GDX Market Vectors Gold Miners Ask Size http://t.co/5JLaH0aNvq $GDX $CSCO $OCFN $CRM #GDX #stocks #tradeideas
DennyT
7 Jul 15 16:33:09
CAT Caterpillar, Inc. News http://t.co/Yi8aaBNkC3 $CAT $GDX $SOXL $XLI #CAT #tradeideas #pennystocks
Emylers
7 Jul 15 16:31:34
ASHR db X-Trackers Harvest CSI 300 China A-Shares Fund Shares http://t.co/VTzfPQFsQI $ASHR $GDX $DXGE $CYBR #ASHR #stocks #invest
Ken
7 Jul 15 16:28:56
New Record ...miners now cheapest vs gold in history $GDX chart doesn't look natural. #riggedmarket #QE $GLD http://t.co/OaZtkUx1ZW
				
				
By  +Follow December 6, 2013 8:22AM
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