Gold Miners Different Than Gold

April 21, 2014

Gold mining ETF performance does not correlate with bullion prices.

Gold Miners Very Different Than Gold

Gold miners' attractiveness as an investment is debatable, but one thing isn't: Investing in gold miners is very different than investing in gold itself—for three big reasons.

1. Returns

Since GDX's launch in May 2006, it has returned negative 34 percent, while GLD returned 95 percent over the same period.

2. Correlation

GLD's R2 indicates it's highly correlated to gold, whereas GDX's suggests it's only weakly correlated.

3. Risk

The Market Vectors Gold Miners ETF (GDX | B-55) is more than twice as volatile as the SPDR Gold ETF (GLD | A-100).

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