New Gold Miners “Juniors” ETF Launches: As Volatile As It Gets

Van Eck has launched a new ETF focused solely on smaller sized gold miners and explorers than the predominant gold miners ETF GDX (GDX). This new Juniors ETF will trade under the ticker GDXJ. According to Investors Business Daily, here are some key stats:

• 63%, of the components are based in Canada, followed by the U.S. with 22%, Australia 11%, South Africa 2%, China 1% and the U.K. 1%
• expense ratio of 0.60%
• GDXJ’s underlying index spiked 92.4% this year through Oct. 30.

Compare that performance with the gold bullion ETF GLD at 19% and GDX at 24% over that same period. This is because of the speculative nature of some of these juniors that explore for years with no finds and then spike massively upon a find announcement. As an example, the fund’s largest holding CDE is up 128% during the Oct 30 YTD period. I’ve made no secret of my thoughts on gold being more of a weak dollar trade than anything else and that silver-platinum ETFs are better performers than gold if it continues to run and currency ETFs are the base case for continued US dollar depreciation, but I’m going to have to eat my hat if this trend continues.

While I won’t be partaking, the prospects for the fund appear to be massive risk and massive volatility which bodes well for a continued upswing in the underlying price of gold and complete ruin if gold returns below $1000.

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