This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Mining ETFs: Implications for Gold

NEW YORK ( TheStreet) -- Most of the articles that you read -- most of the programs that you watch -- have instructed you to forget about stocks. "Sell in May" worked, so... see you in October.

Similarly, gold bears have successfully squashed gold bugs. Very few seem to tout buying SPDR Gold (GLD) these days, as it is quickly being branded as yesteryear's safe haven.

So if stocks are a bad idea in times of enormous uncertainty, and if gold is on its way down to $1000 per ounce (not up to $2000 per ounce), why would anyone be interested in Market Vectors Gold Miners (GDX) ? Perhaps because its price ratio (GDX:SPY) has risen above a key 50-day moving average for the first time since last September; GDX finally has a bit of momentum.

Purchasing miners during a commodities-led economic slowdown may seem foolhardy. Then again, if the smartest businesspeople open shop during a recession, is it possible that the smartest investors are buying hard asset producers in the middle of global growth uncertainty?

In truth, the phenomenon has been confined to gold producers alone. The more diversified SPDR Metals & Mining (XME) isn't confirming a broader trend.

It follows that the bounce higher in Gold Miners may have far more to do with an expectation of widespread central bank easing. When it happens -- when central banks around the world coordinate rate reductions and de facto money printing to help ease the pain in Europe -- gold should recover some bullish momentum. Higher metal prices... higher mining profits.

Nevertheless, the SPDR Gold Trust would probably be the safer selection. There are many times in the history of the Gold Miners when it failed to deliver on rising metal prices.

You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod.

You can follow me on Twitter @ETFexpert.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

Gary Gordon reads:

Real Clear Markets
Jeff Miller
Charles Kirk
On Twitter, Gary Gordon follows:

Jonathan Hoenig
Doug Kass
Hard Assets Investor

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs