Tag Archives: gold

Reasons To Bet On Gold Mining ETFs Now

Gold Mining ETFs have been firing on all cylinders lately thanks to the dual favor by a dovish Fed and an aggressive China. The Fed seems to be in no hurry to hike interest rates this year and has hinted at just two hikes this year dampening the greenback and propelling the broader commodities including gold. In fact, a volatile market outlook, which is making places for safe-haven assets like gold and a sagging dollar, led the gold bullion to rally hard this year. Gold bullion ETF SPDR Gold Shares (NYSEARCA: GLD ) has surged 18.3% so far this year (as of April 11, 2016), enjoying the largest first-quarter gain in three decades. Along with the underlying metal gold, gold mining ETFs also put up great gains as these often trade as leveraged plays on gold. Plus, Chinese gold miners are hunting for lucrative foreign acquisitions thanks to lower gold prices so that they can acquire assets at a bargain, as per Wall Street Journal. Wall Street Journal also reported that “if cash-rich Chinese gold miners embark on an asset-buying spree, China could reduce its dependency on other international producers for supplies and increase its heft in global gold markets. Since many global gold mining companies are facing hard times due to years of low gold prices, these are appearing as lucrative acquisition targets of Chinese buyers. China is the world’s top gold consumer, accounting for about one-third of the global demand. So, its interest in gold acquisition is self-explanatory. In 2015, Barrick Gold Corporation (NYSE: ABX ) offloaded a 50% interest in Barrick (Niugini) Limited (BNL) to Chinese mining company Zijin Mining Group Co. Ltd. ( OTCPK:ZIJMF ) for a total cash consideration of $298 million. Apart from Zijin, another company Zhaojin Mining Industry Co. Ltd. ( OTCPK:ZHAOF ) is mulling over the idea of an overseas gold mining acquisition, as per Wall Street Journal. Several gold mining ETFs hit a 52-week high on April 11. Among them, we highlight five ETFs below that exhibited strong pricing gains. The Weighted Alpha of most of these ETFs hovered around positive 50 , indicating the possibility of further gains. Global X Gold Explorers ETF (NYSEARCA: GLDX ) The fund seeks to match the performance and yield of the Solactive Global Gold Explorers Index. The $39.2-million ETF charges 65 bps in annual fees and has a dividend yield of 7.58% (as of April 11, 2016). First Mining Finance ( OTCQB:FFMGF ), Seabridge Gold (NYSE: SA ), and Oceanagold Corp. ( OTCPK:OCANF ) command the top three positions in the basket. Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ ) This one tracks the Market Vectors Junior Gold Miners Index, which provides exposure to small- and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining. The $1.97-billion product charges 55 basis points in annual fees with a paltry annual dividend yield of 0.46%. B2Gold Corp. (NYSEMKT: BTG ), Alamos Gold Inc. (NYSE: AGI ) and Centamin PLC ( OTCPK:CELTF ) occupy the top three positions in the 49-stock fund. ALPS Sprott Junior Gold Miners ETF (NYSEARCA: SGDJ ) SGDJ seeks to deliver exposure to the Sprott Zacks Junior Gold Miners Index. Each stock’s weighting in the index is based on two factors, namely revenue growth and price momentum. The $34.3-million ETF charges investors 57 basis points on an annual basis. Among individual holdings, Sibanye Gold Ltd. (NYSE: SBGL ), Detour Gold ( OTCPK:DRGDF ) and Tahoe Resources (NYSE: TAHO ) occupy top three spots in the fund. iShares MSCI Global Gold Miners (NYSEARCA: RING ) The fund seeks the MSCI ACWI Select Gold Miners Investable Market Index. The $103-million ETF charges 39 basis points a year. The fund currently has 29 companies in its basket, with the top stocks being Barrick Gold Corp. ( ABX ), Newmont Mining Corp. (NYSE: NEM ) and Goldcorp Inc. (NYSE: GG ). Sprott Gold Miners ETF (NYSEARCA: SGDM ) SGDM tracks the Sprott Zacks Gold Miners Index, which is a rules-based index that assigns weighting to a stock on the basis of fundamental factors like revenue growth and balance sheet strength. This $173-million ETF charges 57 bps in fees. The fund currently holds 25 stocks. Among individual holdings, Franco-Nevada Corporation (NYSE: FNV ), Goldcorp Inc. ( GG ) and Agnico Eagle (NYSE: AEM ) comprise 40% of the portfolio. Original Post

Top ETF Stories Of First Quarter 2016

The start to the first quarter of 2016 was a nightmare, given the twin attacks from oil price slide and China turmoil that intensified fears of a global slowdown. However, these concerns started to fade in the back half of the quarter on continued signs of improvement in the domestic and international markets, pushing global stocks higher. Given this, several events have impacted the ETF world in either a positive or a negative way. Below, we have discussed some of them that dominated headlines and are worth watching in the next quarter: Fed Turned Dovish Again After pulling the trigger for the first rate hike in almost a decade in mid-December, the Fed turned dovish again this year. The cautious approach came on the heels of increased market volatility, global growth concerns, and softness in exports and business investments. In the March meeting, the Fed kept the short-term interest rates steady in the 0.25-0.50% band and dialed back its projection for this year’s hikes. The central bank now expects the federal funds rate to rise to 0.875% by the end of the year, implying two lift-offs, compared with 1.375% that signaled four rate hikes. Expectations of longer-than-expected lower rates have given a boost to the rate-sensitive sectors such as utilities and real estate and high-yield securities. In fact, many of the utility and dividend ETFs like the Vanguard Utilities ETF (NYSEARCA: VPU ) , the Utilities Select Sector SPDR ETF (NYSEARCA: XLU ) , the iShares U.S. Utilities ETF (NYSEARCA: IDU ) , the PowerShares S&P 500 High Dividend Portfolio ETF (NYSEARCA: SPHD ) , the First Trust Morningstar Dividend Leaders Index ETF (NYSEARCA: FDL ) and the ProShares S&P 500 Dividend Aristocrats ETF (NYSEARCA: NOBL ) have been hitting regular 52-week highs and are expected to move higher in the coming weeks (read: Dividend ETFs Hitting All-Time Highs Ahead of Fed Meet ). Though real estate ETFs have not made new highs, they are outperforming the broad market from a year-to-date look. Some of the top ranked funds are the Vanguard REIT Index ETF (NYSEARCA: VNQ ) , the iShares U.S. Real Estate ETF (NYSEARCA: IYR ) and the SPDR Dow Jones REIT ETF (NYSEARCA: RWR ) that are expected to continue their outperformance. Crazy Run of ‘The Oil’ Oil price has been seesawing between losses and gains touching 12-year lows in mid February and then spiraling back to the $40-per-barrel mark in mid March. This spectacular performance led to smooth trading in the overall energy space. In particular, stock-based energy ETFs like the PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) , the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP ) and the First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) surged at least 19% over the past one month. Futures-based energy ETFs like the United States Oil ETF (NYSEARCA: USO ) and the United States Brent Oil ETF (NYSEARCA: BNO ) gained 7% each (read: Crude Back to $40: Can Energy ETFs Sustain Their Rally? ). However, this impressive rally is too good to last as demand will not be enough to reduce the global supply glut. While U.S. producers have started to reduce output and OPEC is looking to freeze production at January levels, increased production from Kuwait, Saudi Arabia and Iran will continue to weigh on the price, thereby failing to rebalance the oil market at least in the short term. Further, PSCE and XOP have an unfavorable Zacks ETF Rank of 5 or ‘Strong Sell’ rating and 4 or ‘Sell’ rating, respectively, while FCG has a Zacks ETF Rank of 3. Japan Moves to Negative Rates In late January, Bank of Japan (BoJ) adopted measures similar to the European Central Bank (ECB) by pushing interest rates to the negative territory, minus 0.1%, for the first time. The aim is to revive growth in the world’s third-largest economy. The move sparked a rally in the Japanese ETFs while weakened the yen against the greenback. Some of the top ranked ETFs in this space are the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) , the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) , the WisdomTree Japan Hedged SmallCap Equity ETF (NASDAQ: DXJS ) and the iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) . Negative interest rates in Japan had also accelerated the selling wave in the global banking sector in early February, which was already bearing the brunt of the tumultuous ride in the market. Nevertheless, the banking sector has been emerging from the crisis in recent weeks on a rebound in oil prices and improving global sentiments. Gold and Gold Miners Rocking After posting the third annual loss in 2015, gold has been on a tear this year as increased market volatility has perked up demand for the yellow metal as a store of value and a hedge against market turmoil. Additionally, the expectation for longer-than-expected low rates will continue to raise the appeal for the gold bullion. Notably, the SPDR Gold Trust ETF (NYSEARCA: GLD ) , the iShares Gold Trust ETF (NYSEARCA: IAU ) , the ETFS Physical Swiss Gold Trust ETF (NYSEARCA: SGOL ) and the Van Eck Merk Gold ETF (NYSEARCA: OUNZ ) are up about 17% each, from a year-to-date look. These funds have a Zacks ETF Rank of 3. Acting as a leveraged play on underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. In particular, the iShares MSCI Global Gold Miners ETF (NYSEARCA: RING ) stole the show in terms of performance, surging 59.3%. This was followed by gains of 52.8% for the ALPS Sprott Junior Gold Miners ETF (NYSEARCA: SGDJ ) , 50.5% for the PowerShares Global Gold and Precious Metals Portfolio ETF (NASDAQ: PSAU ) and 50.3% for the Sprott Gold Miners ETF (NYSEARCA: SGDM ). Bottom Line Investors should closely watch the developments in these spaces as we head into the next quarter and should tap opportunities as and when they come. Link to the original post on Zacks.com

Short Gold With These ETFs

The rally in gold ETFs that was spurred by the safe haven demand in the wake of the Chinese market rout, overall global growth worries and nagging oil price declines at the start of 2016, has started to lose steam. Possibilities of another Fed rate hike as early as in April, given stronger U.S. economic numbers and an upward shift in Q4 GDP data have added strength in the greenback lately. Notably, PowerShares DB US Dollar Bullish ETF (NYSEARCA: UUP ) added over 1.3% in the last five trading sessions (as of March 24, 2016). As a result, a surging greenback weighed on the yellow metal as these are mostly priced in the U.S. dollar. Also, rate hike talks pushed up the U.S. Treasury bond yields in recent times, which in turn wrecked havoc on non-interest bearing assets like gold. In any case, the outlook for gold investing was appalling (read: Pain or Gain Ahead for Gold ETFs in 2016? ). The metal saw its third consecutive annual decline in 2015, being crushed heavily by the strength of the greenback in the wake of the Fed policy tightening, demand-supply imbalances and tepid global inflation (especially in the developed markets). As a result, the largest gold bullion ETF SPDR Gold Shares (NYSEARCA: GLD ) lost over 11% in 2015, followed by a 3.8% decline in 2014 and 28.8% in 2013 (see all precious metal ETFs here ). Now the renewed talks of Fed tightening have cast a shadow over this space. The price of gold fell to the lowest level in more than a month of late. Following the Fed meeting in mid-March, which indicated two more hikes this year, the largest gold bullion ETF SPDR Gold Shares saw asset outflow of $844.9 million from March 20 to March 27, 2016. As a result, investors who are bearish on gold right now may want to consider a near-term short on the precious metal. Below, we highlight a few such options (read: Believe in Goldman? Short Gold with These ETFs ). DB Gold Short ETN (NYSEARCA: DGZ ) This ETN has an inverse (opposite) relation to the movement of gold prices and thus creates a short position in the underlying index. It has managed assets of $23.9 million so far in the year and trades in average daily volume of more than 200,000 shares. This suggest a relatively wide bid/ask spread increasing the total cost for the product beyond the annual fees of 75 bps. DGZ added about 2.7% in the last five trading sessions (as of March 24, 2016). DB Gold Double Short ETN (NYSEARCA: DZZ ) This ETN seeks to deliver twice (2X or 200%) the inverse return of the daily performance of the Deutsche Bank Liquid Commodity Index-Optimum Yield Gold, as per etfdb. The note charges 75 bps in fees per year from investors. The product has amassed about $52.8 million in AUM. The ETN generated impressive returns of about 4.4% in the last five trading sessions (as of March 24, 2016). ProShares Ultra Short Gold ETF (NYSEARCA: GLL ) This fund seeks to deliver twice the inverse return of the daily performance of gold bullion in U.S. dollars; the gold price is fixed for delivery in London. The product is expensive when compared to the other geared options in the space, charging 95 bps in fees a year. The $60-million fund trades in average daily volumes roughly 30,000 shares. The ETF gained 5.6% in the last five trading days (as of March 24, 2016). VelocityShares 3x Inverse Gold ETN (NASDAQ: DGLD ) This product provides three times (300%) short exposure to the daily performance of the S&P GSCI Gold Index Excess Return plus a daily accrual equal to the return that could be earned on a notional capital reinvestment at the 3-month US Treasury rate less the daily investor fee. The ETN has been able to amass an asset base of $18 million. The product is a high cost choice in the gold bullion space, charging 135 bps in fees per year from investors. Additionally, it has a wide bid/ask spread given its small average daily volume of 60,000 shares that increases the total cost of the product. Not surprisingly, the note returned an excellent 8.8% in the last five days (as of March 24, 2016) buoyed by negative sentiments for gold across the globe. Original Post