3 Contrarian ETFs From Alpha Think Tank

July 30, 2014

Gold Miners – Market Vectors Gold Miners (GDX | B-63)

As many investors are painfully aware by now, gold has been out of favor since the start of 2013. Spot gold prices are now roughly 30 percent below their highs set in the fall of 2011. Along with gold prices, gold-miner stocks have gotten clobbered.

Yet certain strategists see opportunities in the sector.

In April, Axel Merk told us he saw miners “finally getting their act together,” and were now controlling their spending and costs. In early July, Merk reiterated his bullish stance on gold because he thinks that even if interest rates rise, real interest rates won’t be positive.

Another gold bull is famed contrarian investor, Marc Faber, editor of the “Gloom, Boom and Doom Report.” He told us in April that he sees gold prices bottoming out, and he doesn’t see mining shares making new lows, with institutions now seeing the massive value in “depressed” share prices.

GDX is currently the largest and most liquid gold mining ETF by a long shot. For a 0.52 percent expense ratio, GDX holds 41 of the largest gold mining companies from around the world whose shares are listed in the U.S. Top holdings include household names like Goldcorp, Barrick Gold and Newmont Mining. Two-thirds of the fund is weighted in Canadian miners, with U.S. and South African companies making up roughly 20 percent, combined.

GDX is a beast of a fund with $7.8 billion in assets, and trades a whopping $670 million a day at pennywide spreads.

GDX’s total returns since its peak on Sept. 9, 2011: -58 percent (as of July 25, 2014)

Five-Year Chart

2_Gold Miners

 

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