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Digging Into Gold Mining ETF GDX

By  +Follow December 6, 2013 8:22AM
Tickers Mentioned:

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
Tim Knight
28 Jul 15 08:22:16
Taking a "two pronged" approach again - - long oil and gold, short equities (but trimming back). $XOP and $GDX prime for bounce.
Bill Tsamis
28 Jul 15 08:02:11
$FCX up 10%....Miners need to follow this $GDX $GDXJ $NUGT $JNUG GDX should get above 15 if it has any cojones
Top ETF Funds
28 Jul 15 08:01:34
OIH Was 1 of the Better-Performing Energy ETFs Last Week.. http://t.co/3426yt2tk4 $GDX #ETF #ETFs #Stocks
28 Jul 15 07:59:19
$GDX looking good here about to take hod and we rally nice #Gold #Bullish $ABX $GG
Bail O'Nomics
28 Jul 15 07:50:40
#Gold sales slump in Q2/Soar in July $JNUG $GLD $FCX $NEM $NG $GC_F $NUGT $ABX $GG $GOLD $XAUSD $DUST $GDX $GDXJ http://t.co/1uqc0wfr9o
28 Jul 15 07:46:29
RT @goldminerpulse: 27 Jul: #gold #etf $ flows: $GLD unchg, $GDX +$2.0M and $GDXJ -$0.9M. SGE premium, close to close, is $13. https://t.…
28 Jul 15 07:39:15
HZNP Horizon Pharma plc % Change http://t.co/1Du45XTOyp $HZNP $GDX $ERY $OWOO #HZNP #finance #pennystocks
28 Jul 15 07:38:04
HON Honeywell Intl Stock Message Board http://t.co/6trAzCWJFr $HON $KBE $GDX $VLO #HON #stock #nasdaq
28 Jul 15 07:36:33
GDX Market Vectors Gold Miners Last Price http://t.co/DSQOuvJt66 $GDX $VTI $BMY $DIS #GDX #invest #pennystocks
Stock Forums
28 Jul 15 07:34:05
CYBR Cyber-Ark Software Ltd. Bid Size http://t.co/pECjmZNJd8 $CYBR $TASR $GDX $AMBA #CYBR #stock #investing
28 Jul 15 07:33:44
#Gold Miners ETF GDX - last: $13.6079 @ 10:18am EST 7/28/2015 http://t.co/yG6IikoVO1 $GDX
Prices Gold
28 Jul 15 07:33:41
#Gold Miners ETF GDX - last: $13.6079 @ 10:18am EST 7/28/2015 http://t.co/htwHlFfhK4 $GDX
28 Jul 15 07:32:48
Downward trend on #Materials #ETFs $GDX $XLB $XME - down -7.18% rel to S&P in 13 days - http://t.co/hroVrV4kFl http://t.co/okxV55URBR
IH News Desk
28 Jul 15 07:31:34
AMZN http://t.co/Us6wYugZ9X, Inc. Change http://t.co/sdnrSRY1RM $AMZN $CELG $HACK $GDX #AMZN #share #investing
28 Jul 15 07:30:10
Huge Gains On Stock Picks, Plus A Major Announcment: http://t.co/L7DCrvU4Ev $PZG $APOG $GDX
Mark Freeman
28 Jul 15 07:28:38
$GLD update: $GDX 65 % bullish 35 % bearish, bulls not helping themselves, have made it very easy for bears. $GLD, $GDXJ, $NUGT.
28 Jul 15 07:16:52
Long some Gold Miners $GDX $NUGT
28 Jul 15 07:06:38
Alternative Investments - Gold http://t.co/jQ9UUiUYqD $GLD $GDX $HGY.CA
Bill Tsamis
28 Jul 15 07:05:44
$GLD $GDX $GDXJ https://t.co/SMCVqpIrzT
TV_Trading Ideas
28 Jul 15 07:04:57
GDX $GDX http://t.co/0pxHGfETaf
28 Jul 15 07:02:05
$OCLS cheap health care stock. Price target of $5. 200%+ upside $GDX $SLV $GLD $FXI $TNA $EZU investors read http://t.co/rWpJvFEbwZ
James DiPlata
28 Jul 15 06:58:57
Badger Lacrosse
28 Jul 15 06:53:03
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
Kaleth Miguel♪✌
28 Jul 15 06:53:02
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
Shaun Jobson
28 Jul 15 06:53:01
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
28 Jul 15 06:52:56
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
28 Jul 15 06:52:54
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
28 Jul 15 06:52:53
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
رأفت شمس الدين
28 Jul 15 06:52:52
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
Louisa Cotterill
28 Jul 15 06:52:49
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
ღ αℓєxαηdяα мυiя ღ
28 Jul 15 06:52:48
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
28 Jul 15 06:52:47
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
Michael Cross
28 Jul 15 06:52:45
RT @DayTradersGroup: sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GO…
28 Jul 15 06:50:04
XLE Energy Select Sector SPDR E.P.S. http://t.co/2iIJkpoLwI $XLE $GDX $BX $IWM #XLE #tradeideas #tradeideas
28 Jul 15 06:50:03
XLB Materials Select Sector SPDR Prev Close http://t.co/FGc6yZ1xTD $XLB $HXD.TO $IWM $GDX #XLB #stocks #investing
Investors Hangout
28 Jul 15 06:50:03
XLI Industrials Select Sector SPDR Bid Size http://t.co/uyvegnalyA $XLI $CVX $GDX $AGEN #XLI #stock #stocks
28 Jul 15 06:49:28
VXX iPath S&P 500 VIX Short-Term Futures ETN Open http://t.co/6GW6XrG7lt $VXX $GDX $KBE $PEIX #VXX #finance #stockmarket
Investors Hangout
28 Jul 15 06:49:07
VXUS Vanguard Total International Stock ETF Bid http://t.co/L1BBGnfcId $VXUS $TWTR $IYR $GDX #VXUS #stock #investing
28 Jul 15 06:48:15
TVIX VelocityShares Daily 2x VIX Short Term ETN E.P.S. http://t.co/Ne1EQk3nw0 $TVIX $UCO $GDX $UVXY #TVIX #nasdaq #stockmarket
IH News Desk
28 Jul 15 06:48:07
UA Under Armour, Inc. 52Wk High http://t.co/UrpfGQNHBA $UA $SDRL $GDX $KITE #UA #finance #finance
28 Jul 15 06:47:09
UA Under Armour, Inc. Company Info http://t.co/H3F98CGf1s $UA $XIU.TO $PBR $GDX #UA #nasdaq #stock
28 Jul 15 06:47:08
UGAZ VelocityShares 3x Long Natural Gas ETN Prev Close http://t.co/zfhWVG9Jpl $UGAZ $GDX $SGYP $XLV #UGAZ #investing #pennystocks
28 Jul 15 06:45:12
SDRL Seadrill Ltd. % Change http://t.co/C95BBQTlhl $SDRL $NFLX $QLD $GDX #SDRL #stocks #nasdaq
Day Traders Group
28 Jul 15 06:44:42
sweet 34% gain on $NFLX puts congrats to traders in our group! http://t.co/FUhluNJ0ew $AAPL $FB $TSLA $TWTR $YHOO $GOOGL $SPY $QQQ $GDX $MU
28 Jul 15 06:44:11
RSX Market Vectors Russia ETF Trust Last Price http://t.co/qMol6ZobdL $RSX $GDX $UBNT $KBE #RSX #finance #finance
IH News Desk
28 Jul 15 06:43:35
POZN Pozen, Inc. Exchange http://t.co/LmBXNxO2Ed $POZN $GDX $WMIH $IWC #POZN #finance #invest
Investors Hangout
28 Jul 15 06:42:38
PCLN http://t.co/sVWftTxjA6 Inc. Bid Size http://t.co/1A3ampdTyE $PCLN $AMZN $GDX $INTC #PCLN #pennystocks #stock
28 Jul 15 06:42:34
ONTY Oncothyreon Inc. Filings http://t.co/6YuBvVyUQZ $ONTY $POZN $GDX $HD #ONTY #share #stocks
28 Jul 15 06:42:10
MBLY Mobileye NV Investor Opinions http://t.co/wjNzApJPZl $MBLY $GDX $CYTX $F #MBLY #pennystocks #pennystocks
Investors Hangout
28 Jul 15 06:41:11
MBLY Mobileye NV 52Wk High http://t.co/mXDw63igEW $MBLY $IYR $GDX $KBE #MBLY #tradeideas #investing
By  +Follow December 6, 2013 8:22AM



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