These ETFs Are a Gold Mine

Gold hit a new high today at $1,133 an ounce, and gold ETFs are rising along with it. Unlike gold bullion, however, gold miners are still below their 2008 peak.

In March 2008, the Market Vectors Gold Miners (GDX - commentary - Trade Now) hit a high of $56.87 per share, but since bottoming during last year's crash, the GDX has yet to close above the $50 level. Today's move, which has seen shares trading above $51 per share, should change that.

Most of the market has seen declining volume in this rally, but gold stock ETF volume is up. Higher highs on stronger volume are bullish, and as long as gold prices remain elevated, a takeout of the 2008 highs is likely.

Traders looking for the GDX to break its all-time high may want to try Market Vectors Junior Gold Miners (GDXJ - commentary - Trade Now). At noon, the GDX was up 3%, but the GDXJ was up 4.4%.

A pullback here is possible, though, with the GDX up on 10 of the past 11 days. A drop to the 50-day moving average would cause about 9% in losses, while the high is about 11% away. The GDXJ would exaggerate the move in the either direction.

At the time of publication, Dion was long GDX and GDXJ.

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At the time of publication, Dion was long GDX and GDXJ.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.