Schiff: Gold Miners Ripe; Bitcoin ETF Rings Hollow

August 05, 2014 INSIGHT

ETFS Physical Silver (SIVR | A-100)
Schiff is bullish on all commodities, but none so more than gold. Yet he points out that historically, silver follows a gold bull market, and recommends silver, claiming if he's right about gold, silver will rise proportionally higher. SIVR is currently the cheapest option for "pure" silver exposure. Like iShares' Silver Trust (SLV | A-99), SIVR' shares are backed by physical silver in vaults, providing access to near-spot prices. SIVR charges a segment-low 0.30 percent, 20 bps less than SLV for virtually the same exposure. SIVR doesn't come close to matching SLV's $6.6 billion in assets, but its popularity is nothing to scoff at—it boasts $385 million in assets and trades more than $1.6 million a day at 8 bp spreads.

Market Vectors Gold Miners (GDX | B-63)
Schiff sees real value in gold mining stocks. He claims many of them are priced for gold far below the current $1,300 spot price, and if his bullish gold prediction comes to fruition, he sees a lot of upside in mining stocks. GDX is the goliath in the mining space, with close to $8 billion in assets. The cap-weighted fund holds roughly 40 of the largest gold miner stocks listed in the U.S., meaning household names like Goldcorp, Barrick Gold and Newmont Mining are stacked at the top. Roughly two-thirds of the fund is weighted in Canadian miners. GDX charges 52 basis points, but tends to trail its index by only 39 basis points over most 12-month stretches. The fund is a trading powerhouse, with more than $720 million changing hands daily at ultra-tight spreads.

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