Eyeballing gold miners

Gold’s rise helps this specific sector Wall Street Connected Profit Like The Pros Brought to you by: A part of all I earn is mine to keep - The Richest Man In Babylon Dear subscriber, Financial networks focus on gold itself. But they miss the real story. I’m talking about gold miners. In fact, the VanEck Vectors Gold Miners ETF (GDX) landed second to the S&P 500 ETF (SPY) last week amongst advisors with more than $1 billion under management. And there’s a good reason you should look into this sector. Who are the miners? Like most specialized sectors, gold miners are made up of a few key players. The GDX ETFs top five holdings include: - Newmont Corp. - 15.3% - Barrick Gold Corp. - 12.08% - Franco-Nevada Corp. - 8.02% - Wheaton Precious Metals Corp. - 5.58% - Newcrest Mining Limited - 5.1% Together, these 5 companies make up over 46% of the GDX holdings. Miners come in two varieties: senior and junior. Technically, senior isn’t one but we’ll go with it for now. Senior miners are the big guys noted above. Junior miners are smaller capitalization miners. You can find them in the GDXJ ETF. Think of the GDX like the S&P 500 and the GDXJ as the Russell 2000. Relationship to gold Since the price of gold is a major component of their profit margins, miners often trade in tandem with gold prices. In most cases, they will make larger percentage moves versus gold itself. Here’s an example. From the low in March 2020 to the high in August of that same year, the GDX rose 182.94%. The GDXJ rose 237.86%. Gold only rose 42.85%. However, there is one major difference between the miners and gold. Miners are still companies while gold is a commodity. When the stock market tanks, miners tend to get dragged along even if gold does not. Playing the miners Gold mining operations aren’t difficult to understand. Their entire business is based on just a few factors: - Gold prices - Mining costs (energy prices) - Transport costs - Total output - Exploration costs That’s pretty much it. They work a lot like any oil exploration company does. So, when energy prices plummet, their cost to mine goes down. If their mines start to run bare, exploration costs go up and total output declines. However, asset managers like using ETFs because they’re simpler. Sure, you might earn a better return doing the homework on a few individual companies. But it takes more time. Gold’s outlook Many economists expect the price of gold to continue higher as inflation takes hold. In a nutshell, the amount of gold in the world is relatively finite compared to money supply. So, when the Fed drops more dollars out there, you have to spend more of them to buy the same piece of gold. For simplicity’s sake, just think of gold as a hedge against inflation. When inflation goes up, so does the price of gold (most of the time). Our hot take It’s particularly interesting to see search volume pick up when miners aren’t yet near their all-time highs. Given that shares of the GDX are just below the halfway point between the 52-week highs and lows, this could be an interesting spot to build a position. Sponsored [High Profile Team Leveraging Hydrogen Vehicle Boom]( Hydrogen Vehicles Are Here & This Company Has a Big Foot in the Door For Fueling Them [Read More Here]( What we’re watching [Wall Street Connected: Skillz]( Today's company, Skillz, develops and supports an online-hosted technology platform enabling independent game developers to host tournaments and provide competitive gaming activity to end-users. [Watch Now]( OUR RECENT POSTS [Outdoor stocks with high search volume]( Companies building big brands [Read more]( [This trucking company is on fire]( Shares make new all-time highs [Read more]( - The Editorial Staff # [submit to reddit]( [submit to reddit]( [submit to reddit]( Update your email preferences or unsubscribe [here](#). View our privacy policy [here](#). Copyright ©2021 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc. newsletter is for information purposes only and opinion-based. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or against losses. No representation or implication is being made that using any of these methodologies or systems will generate returns or ensure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](