Trade has played foul on Wall Street throughout August, sending the broad indices into a tailspin, thus compelling investors to flock to gold as a great store of value and hedge against market turmoil. The trade drama turned for the worse as the world’s two largest economies levied a tit-for-tat increase in tariffs though trade talks are expected to resume shortly.
The combination of other headwinds including low inflation, collapse in bond yields, global recession fears, political unrest in Hong Kong as well as a plunge in Argentina's currency and stock markets spurred demand for the yellow metal. Further, rising hopes of loose monetary policies across the globe added to the metal’s strength. Lower rates will continue to weigh on the dollar against a basket of currencies, raising the yellow metal’s attractiveness as it does not pay interest like fixed-income assets.
As both domestic and overseas markets are struggling, gold hit six-year highs to above $1,500 per ounce with expectation of further increase if uncertainty lingers. Moreover, the central banks have become significant buyers of gold (read: Gold ETF Inflows Hits 6-Year High: How to Go Long).
Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. Given this, we highlight five gold mining ETFs and stocks that led the market in August. These could be excellent plays for investors, who believe that gold will continue to move higher given the rocky fundamentals.
iShares MSCI Global Gold Miners ETF RING: Up 11.8%
This ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 35 securities in its portfolio. Canadian firms take half of the portfolio, while the United States, South Africa and Australia round out the top four with double-digit exposure each. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $304.2 million and trades in good volume of 211,000 shares per day (read: 5 ETFs That Are Up More Than 10% in Volatile August).
U.S. Global GO GOLD and Precious Metal Miners ETF GOAU: Up 9.9%
This fund provides investors with access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means. It tracks the U.S. Global Go Gold and Precious Metal Miners Index, holding 29 stocks in its basket. Canada takes the lion’s share at 56.8%, followed by South Africa (17.8%) and the United States (12.9%). It has amassed $26.6 million in its asset base and charges 60 bps in fees per year. Volume is light at nearly 18,000 shares.
VanEck Vectors Gold Miners ETF GDX: Up 9.8%
This is the most-popular and actively traded gold miner ETF with AUM of $11.7 billion and average daily volume of around 48 million shares. The fund follows the NYSE Arca Gold Miners Index, holding 44 stocks in its basket. Canadian firms account for half of the portfolio, while Australia (18.1%) and the United States (17.2%) round off the top three. The fund charges 52 bps in annual fees (read: Fed Cuts Rate: Sector ETFs & Stocks Set to Soar).
Sprott Gold Miners ETF SGDM: Up 9.5%
This fund follows the Solactive Gold Miners Custom Factors Index, holding 31 stocks in its basket. Here again, Canada takes the top spot at 60% followed by 20% in the United States and 17% in South Africa. The fund has amassed $198.3 million in its asset base and trades in moderate volume of around 45,000 shares a day. It charges 50 bps in annual fees from investors.
VanEck Vectors Junior Gold Miners ETF GDXJ – Up 6.6%
GDXJ is a small-cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 70 stocks in its basket, Canadian firms dominate the fund’s portfolio at 46.5%, while Australia (25.3%) and South Africa (9.1%) round out the top three. The product has AUM of $4.5 billion and charges 53 bps in annual fees. It trades in heavy volume of more than 15.4 million shares a day on average.
Harmony Gold Mining Company Limited HMY: Up 39.4%
It is engaged in the exploration, extraction and processing of gold in South Africa and Papua New Guinea. The stock has a Zacks Rank #2 (Buy) and VGM Score of A. It has a market cap of $1.6 billion (read: 5 ETF Zones to Take Shelter From Trade War).
Yamana Gold Inc. AUY: Up 21.8%
It is engaged in operating mines, development stage projects, and exploration and mineral properties primarily in Canada, Brazil, Chile and Argentina. With a market cap of $3.4 billion, it has a Zacks Rank #2 and VGM Score of C.
Asanko Gold Inc. AKG – Up 20.3%
This company is engaged in the exploration, development and production of gold properties. It has a Zacks Rank #1 (Strong Buy) and VGM Score of B. The stock has a market cap of $210.2 million. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
AngloGold Ashanti Limited AU – Up 18.9%
It is the third-largest gold mining company in the world, measured by production. With a market cap of $9.4 billion, it has a Zacks Rank #1 and VGM Score of B.
Kinross Gold Corporation KGC – Up 17.1%
This company is engaged in the acquisition, exploration and development of gold properties in the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. The stock has a Zacks Rank #1 and VGM Score of B. It has a market cap of $6.2 billion.
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iShares MSCI Global Gold Miners ETF (RING): ETF Research Reports
VanEck Vectors Junior Gold Miners ETF (GDXJ): ETF Research Reports
Sprott Gold Miners ETF (SGDM): ETF Research Reports
VanEck Vectors Gold Miners ETF (GDX): ETF Research Reports
Kinross Gold Corporation (KGC) : Free Stock Analysis Report
Asanko Gold Inc. (AKG) : Free Stock Analysis Report
Harmony Gold Mining Company Limited (HMY) : Free Stock Analysis Report
AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
Yamana Gold Inc. (AUY) : Free Stock Analysis Report
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU): ETF Research Reports
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