Gold Regains Luster: 5 Mining ETFs On The Rise

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After wrapping up its biggest quarterly loss since the fourth quarter of 2016, gold saw strength to start the second quarter as positive fundamentals started to build up in the space. The twin tailwinds of a declining dollar and declining yields have started to rekindle investors’ interest in the precious metal.

Though the Federal Reserve upgraded the outlook for the economy and inflation, it still pledged to provide easy policies through ultralow interest rates and large monthly bond purchases to provide support to the economy. It reiterated its commitment to maintain lower rates near zero through 2023. This means that cheap money will flow for more quarters to come, resulting in a sharp decline in the U.S. dollar against the basket of major currencies giving boost to the gold price. Notably, the yellow metal is on track for a weekly gain of more than 1% this week.

The persistently accommodative stance on monetary policy has also helped Treasury yields, which took toll on the precious metal lately, to cool down this week. Additionally, the Fed Chair Powell stated that the rise in inflation this year is temporary and warned that an uptick in COVID-19 cases could slow the recovery. This has raised the appeal for the yellow metal as a store of value.

The gold has been under immense pressure this year, plunging 8% amid strong optimism over global economic recovery and rising bond yields, which has dulled the shine for the yellow metal as it does not pay any interest like the fixed-income assets.

Acting as leveraged plays, gold miners tend to experience more gains than the gold bullion. As a result, we have highlighted five gold mining ETFs that are benefiting the most from recovering metal market trends over the week and are likely to continue their strong performance at least in the near term.

Sprott Junior Gold Miners ETF (SGDJ - Free Report) : Up 5.7%

This fund follows the Solactive Junior Gold Miners Custom Factors Index, which measures the performance of junior gold producers with the strongest revenue growth and junior exploration companies with the strongest stock price momentum. It holds 36 stocks in its basket with Canadian firms making the largest share at 37.1%, followed by Australia (32.5%) and the United States (9.7%). The fund has amassed $121.4 million in its asset base and trades in lower volume of around 40,000 shares a day. It charges 50 bps in annual fees from investors.

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