Gold Miner ETFs Glitter as Geopolitical Tensions Mount

Consideration geopolitical tensions popping up everywhere investors look, gold prices have failed to capitalize on the yellow metal’s safe-haven standing amid sustained U.S. dollar strength – typically, the two assets have an inverse relationship, which has put downward pressure on the “risk-off” commodity since late February.

That changed Friday when U.S. President Donald Trump bully Mexico with a 5% tariff on all imports to curb illegal immigration. The move raised global uncertainty to levels not received since the fourth quarter of 2018, especially when compounded with renewed U.S.-China trade tensions, Brexit disorder, and China’s recent threat to blacklist foreign firms it accuses of damaging its interests. In response, gold futures for August (GC=F) pounced 1.45% to reach a seven-week high and post their first monthly gain in four months.

“We are seeing a drip-feed of incidents finally impacting gold’s safe-haven appeal … We’ve been expecting gold to perform well in this milieu, and it is living up to our expectations,” said Ross Strachan, a senior commodities economist at Capital Economics, per commodities website kitco.com.

Merchants can play a gold rally by gaining exposure to gold mining companies using these three exchange-traded stores (ETFs) Let’s look over each fund in more detail and discuss some trading tactics to employ.

With assets under management (AUM) of $9.18 billion, the VanEck Vectors Gold Miners ETF (GDX) seeks to track the price and yield performance of the NYSE Arca Gold Miners First finger. The fund, which formed in 2006, holds well-known names in the gold mining space, including Newmont Goldcorp Corporation (NEM), Barrick Gold Corporation (GOLD), and Newcrest Scouring Limited (NCMGY). Its top 10 holdings carry a 61.96% weighting, making its portfolio somewhat top heavy. A narrow unexceptional spread of 0.05% and daily dollar volume liquidity of almost $700 million keep trading costs low. The pay for’s 0.53% management fee sits in line with the 0.54% category average. As of June 3, 2019, GDX offers a 0.56% dividend gate and has declined 3.18% year to date (YTD).

Despite the 50-day simple moving average (SMA) crossing above the 200-day SMA in at February to generate a “golden cross” buy signal, the fund has failed to add further gains since that time. Susceptibility changed Friday when GDX broke out from a period of tight May consolidation to close up 3.95% for the day. Significant volume escorted the move, showing conviction from the gold bulls. Traders who buy the breakout should book profits on a test of the February and Strut swing highs at the $23.40 level. Place a stop-loss order below Friday’s low at $21.19 in case the ETF’s price speedily reverses.

Launched in 2010, the Direxion Daily Gold Miners Needle Bull 3X Shares (NUGT) aims to provide three times the return of the NYSE Arca Gold Miners First finger – effectively making it a leveraged version of GDX. The ETF’s basket primarily holds publicly traded gold and silver mining crowds that operate in both developed and emerging markets. It turns over nearly 8 million shares per day and has an average spread of 0.06% that chooses it a suitable instrument for swing traders who want an aggressive bet on the gold price rising. Although the fund has a pricey 1.23% expense correlation, it won’t overly affect short-term stays. Traders should note that the ETF rebalances daily, which makes returns profound than one day subject to the effects of compounding. NUGT has $1.08 billion in net assets, issues a 0.39% dividend yield, and is down 17.09% on the year as of June 3, 2019.

NUGT apportions tracked lower for most of April before trading in a narrow two-point range throughout May. On Friday, the fund’s reward closed convincingly above this range and the 200-day SMA, which could trigger further upside force as short sellers rush to cover their positions. The relative strength index (RSI) gives a reading below the overbought dawn, allowing ample room for the price to continue higher in the days and weeks ahead. Traders should anticipate a arouse back up to the crucial $23 resistance area, where the price may find headwinds from a horizontal trendline. Shelter capital by setting a stop under the 200-day SMA.

Created in 2013, the Direxion Daily Junior Gold Miners Index Bull 3X Appropriates (JNUG) attempts to offer investment results that correspond to three times the daily performance of the MVIS Pandemic Junior Gold Miners Index. The benchmark comprises mining companies that derive at least 50% of their take from gold or silver mining activities. JNUG’s average spread of 0.13% may be a little wide for intraday scalpers, but it suits sellers who can let profits run. Daily turnover of roughly 13 million shares ensures that traders can enter and exit the nest egg with minimal slippage. Trading at $7.55, with AUM of $706.7 million and paying a 0.66% dividend yield, the ETF has a YTD repayment of -29.89% as of June 3, 2019.

Since late February, the JNUG share price has retraced toward the $6.5 level, where it gather ups significant support from the September and November bottoms. The price has oscillated within a descending channel on its move reduce to established clear support and resistance areas. Those who trade the ETF should set a take-profit order between $8.50 and $9 – a raze where the price encounters resistance from the channel pattern’s top trendline and 200-day SMA. Keep a tight keep positioned under the Friday low at $7.04 to cut losses if the upside momentum doesn’t immediately follow through.