Gold Mining ETFs Outshine The Metal

Gold-related ETFs top the performance and flows charts.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

It's been a spectacular year for gold so far. The yellow metal had its best quarterly performance in 30 years in the quarter ending Thursday, surprising the investing community across the board. Prices rose by 16.1% in the quarter to end at $1,232.71 after starting the year near the lowest levels since 2009.

But that wasn't the only milestone for gold. An exchange-traded fund that tracks the metal captured the most investor dollars of any ETF so far in 2016. The SPDR Gold Trust (GLD | A-100) had inflows of $6.8 billion through the first three months of the year, according to FactSet. The second-largest gold ETF, the iShares Gold Trust (IAU | B-100), also had an impressive haul: $1.2 billion.

Gold Price



Investors Push Gold Up
In fact, the rise in gold prices and the inflows into gold exchange-traded funds may go hand in hand. Gold ETFs bought up a whopping 9.7 million troy ounces—or 300 metric tonsworth of bullion in the first quarter.

Gold ETF Holdings



To put that in perspective, that's the equivalent of 27% of total global gold demand in the fourth quarter.

The sudden surge of investor interest in gold paralleled the big swoon in stock prices in January and February. But though the stock market has rebounded since then, gold has impressively held on to most of its gains.

Negative interest rates around the world, an expanded quantitative easing program from the European Central Bank, and promises by the Fed to move only gradually when hiking rates may all be serving to keep a bid under gold prices.

Miners: Top-Performing ETFs
Yet as well as gold prices themselves have done this year, the biggest winners have been the miners. Indeed, mining exchange-traded funds were the best-performing of all ETFs in Q1.

At the No. 1 spot was the Direxion Daily Gold Miners Bull 3x (NUGT), which surged an eye-popping 141% in the period.

But even outside leveraged ETFs, the gains were enormous. The PureFunds ISE Junior Silver ETF (SILJ | F-61) was the best nonleveraged fund, with a return of 71.6%.

Following suit was the iShares Global Gold Miners ETF (RING | B-99), with a gain of 56.2%, and the Sprott Junior Gold Miners ETF (SGDJ), with a gain of 49.4%.

All together, almost a dozen gold mining ETFs were clustered in the 40-50% return range, including the largest of the bunch, the Market Vectors Gold Miners ETF (GDX | C-74), with its 45.6% advance.

Q1 Returns For GLD, NUGT, SILJ, RING, SGDJ, GDX



Bulls hope that after years of declines, the battered mining sector may be finally turning the corner.

That will likely come down to whether gold prices can maintain current or even higher prices―which itself may come down to whether the strong appetite for physically backed gold ETFs such as GLD and IAU continues.

Contact Sumit Roy at [email protected].

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.