Miner ETF Not Quite as Good as Gold

Here's a warning for investors who believe they have the Midas touch: Not all gold ETFs are guaranteed to shine.

Van Eck's Market Vectors Gold Miners ETF (GDX Quote) had traded on the American Stock Exchange for only one session last month when the World Gold Council reported some seemingly great news. Gold investment demand through ETFs jumped 59% in the first quarter of 2006 from a year earlier, the council's data showed.

For gold investors, the news wasn't particularly surprising, given that the returns on the market-dominant gold ETF, the streetTRACKS Gold Shares(GLD Quote), were up 25% for the year as of May 23, the date of the WGC's release. The other main ETF linked to gold, the iShares Comex Gold(IAU Quote), was up in a similar amount. Meanwhile, the money managers at New York-based Van Eck, seeking to capitalize on the success of streetTRACKS Gold Shares, had launched the Market Vectors Gold Miners ETF in hopes that investors would find the miners as enticing as the metal. ...