Don Dion's Weekly Blog Wrap

Among Don Dion's featured blogs the past week on RealMoney were gold miners benefitting from buying in the Market Vectors Gold Miners ETF, ETFs and the coming water crisis and First Solar and China.

Which Gold Miners Benefit From Buying in GDX?

Posted 9/11/2009 9:34 a.m. EDT

Market Vectors Gold Miners (GDX Quote) has a mix of large- and small-cap companies, and the recent interest in gold raises the question of ETF impact on individual stocks.

GDX allocates less money to smaller-capitalization stocks, as the asset allocation to each holding roughly correlates to market cap. Barrick Gold (ABX Quote) is the largest holding with a $33 billion market cap, while Vista Gold (VGZ Quote) is the smallest holding and has a market cap of less than $100 million.

I calculated which stocks would see the most buying as dollars flowed into GDX, based on current market caps and percentage of assets. At the moment, the largest-capitalization company most affected by GDX would be Iamgold (IAG Quote), at 4.37% of assets. GDX owns roughly 4.3% of IAG's outstanding shares.

GDX does not own more than 5% of any one company's outstanding shares. It typically owns more than 4%, except for funds with market caps over $5 billion (save IAG), where its ownership ranges from about 1.9% to 3%. Except for the large-caps, which are least swayed, most of the stocks in GDX will be similarly affected.

Slightly more affected is Great Basin Gold (GBG Quote), which makes up 0.47% of GDX's assets; GDX owns 4.6% of the outstanding shares. Aurizon (AKZ Quote) and New Gold (NGD Quote) are two others with slightly higher ownership levels.

A comparison of shares owned to three months' average daily volume shows GDX holds 17 days' worth of Lihir (LIHR Quote) and more than 10 days' worth of New Gold, Aurizon, Great Basin, Tanzanian Royalty Exploration (TRE Quote) and Nevsun (NSU Quote).