Gold Mining ETFs Digging Up Profits in 2014

Jacob Harper |

While we’re still three weeks form the conclusion of the first fiscal quarter of 2014 we can already see a few trends shaping up. In the Financial sector perhaps the most dramatic case has been the re-emergence of funds that follow gold mining companies.

The top gainer has so far been the leveraged Direxion Daily Jr. Gold Miner Bulls 3x ($JNUG). The fund, which seeks to triple returns from the index, has been on a tear, returning 113.21 percent since Jan. 1. JNUG’s large-miner tracking equivalent, the Direxion Daily Gold Miner Bulls 3x ($NUGT), has itself added  77.02 percent. The unleveraged Global X Gold Explorers ETF ($GLDX) has likewise had a banner 2014, notching a 42.27 percent return, and the most popular junior gold miner ETF, Market Vectors Junior Gold Miners ($GDX), notched an increase of 34.88 percent.

The explanation is pretty simple: gold is up this year, at around $1350 an ounce as of Mar. 6. There appears to be support for gold around at least $1200 an ounce, which is opportune for miners looking for the price of the yellow metal to maintain value over $1200.

This stands in stark contrast to a 2013 during which a numerous components of the global economy were rejoicing, while gold shed 28 percent of its value, dramatically ending a bull run on the precious metal that had lasted for 12 years.  Gold mining ETFs suffered as well, done in by fears concerning the Federal Reserve’s “tapering” of quantitative easing.

Gold’s rebound indicates the caution with which investors are approaching the market in 2014. Gold has historically been a safe haven in times of economic uncertainty. With the American economy’s rebound slowing in January and February from its breakneck 2013 pace, worried investors are throwing wealth back into gold. And in turn, gold mining companies are reaping the benefits.

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Companies

Symbol Name Price Change % Volume
AAUKF Anglo Amer Plc Ord. 15.05 0.00 0.00 0

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