Investors Not Buying Into Miner Rally
Riding on the coattails of the precious metals rally are the miner ETFs. This perennially beat-up group has seen a reprieve this year, and easily outpaced the gains in metals prices themselves.
The iShares MSCI Global Gold Miners ETF (RING) and the Sprott Gold Miners ETF (SGDM) each gained more than 51% so far this year. At the same time, the VanEck Vectors Gold Miners ETF (GDX), the Global X Gold Explorers ETF (GOEX), the ETFMG Prime Junior Silver ETF (SILJ) and the VanEck Vectors Junior Gold Miners ETF (GDXJ) gained more than 41% apiece.
Yet even those sharp gains haven’t aroused the interest of ETF investors. Gold miner ETFs shed billions in assets this year, led by a $2.4 billion outflow from GDX and a $1.1 billion outflow from GDXJ.
Perhaps investors haven’t been seduced by this year’s rally in miners because of the industry’s reputation for poor governance and abysmal long-term performance. Case in point: Since GDX’s inception in May 2006, the fund is down 16.9% compared with a positive 124.6% return for GLD.
In fact, investors are so skeptical of the gold miner rally that they’ve plowed millions into leveraged, inverse gold miner ETFs. The Direxion Daily Gold Miners Index Bear 3x Shares (DUST) and the Direxion Daily Junior Gold Miners Index Bear 3x Shares (JDST) have year-to-date inflows of $491 million and $182 million, respectively.
The equivalent products for bullish positioning—the Direxion Daily Junior Gold Miners Index Bull 3x Shares (JNUG) and the Direxion Daily Gold Miners Index Bull 3x Shares (NUGT)—registered outflows of $488 million and $974 million, respectively, in the same period.
That said, a few miner ETFs have seen some modest interest from investors this year. The Global X Silver Miners ETF (SIL), the iShares MSCI Global Gold Miners ETF (RING), the ETFMG Prime Junior Silver ETF (SILJ), the iShares MSCI Global Silver Miners ETF (SLVP) and the Sprott Gold Miners ETF (SGDM) have year-to-date inflows ranging from $26 million to $100 million.
That’s not bad, but not great. The big money is clearly shunning miners in favor of bullion-backed ETFs.
PM Miner ETF Flows (YTD)