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I am not a financial advisor. This post is to provide information and not provide financial product advice. I discuss why I personally chose to invest in a stock, ETF, REIT, investment fund or cryptocurrency (which I have held for over a week) and also share information that is public about the following stock, ETF, REIT, investment fund or cryptocurrency and they are based on my own personal opinion.
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I do not work in the financial industry, so just because I write about it, doesn’t mean you should own it. So, consult with a financial advisor and do your due diligence, RESEARCH!
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VanEck is one of the first U.S. asset managers which offered investors access to international markets and also for their history in gold investing, the firm’s first international stock portfolio became the U.S.’s first gold mining portfolio.
Launched in 1955 courtesy of John van Eck, VanEck has been privately owned and operated by the van Eck family.
In 1968, the family developed the U.S.’s first gold equity fund, created the first hard asset fund in 1994 and launched their ETF business in 2006.
I have always wanted to invest in gold and I wasn’t really sure how, but I did peruse the Internet. I figured, if I’m going to invest in gold, it would be great to gain some exposure to gold mining companies. So, I discovered VanEck and read about their history in gold and sure enough, VanEck Vectors Gold Miners ETF (GDX) became one of my first investments into gold and also to play a little defense.
According to the fund’s strategy:
The investment seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Gold Miners Index®.The fund normally invests at least 80% of its total assets in common stocks and depositary receipts of companies involved in the gold mining industry. The index is a modified market-capitalization weighted index primarily comprised of publicly traded companies involved in the mining for gold and silver. The fund is non-diversified.
It’s primary holdings are in Newmont Corp., Barrick Gold Corp, Franco-Nevada Corp, Wheaton Precious Metals Corp, Newcrest Mining Ltd., Agnico Eagle Mines Ltd., Northern Star Resources Ltd., Kirkland Lake Gold Ltd., Kinross Gold Borp., Anglogold Ashanti Ltd. ADR and more. With a total asset of $13.6 billion, you are getting the larger and more established gold miners in this ETF.
According to a February 2021 article on Yahoo! news, to be added to the GDX, gold miners must have a market cap of $750 million and trade more than 50,000 shares over the last three months. They are deleted from the ETF if their market cap falls below $450 million or if fewer than 30,000 shares change hands over three months.
For me, I wanted to look for something long-term and Morningstar’s overall rating was a three, the risk average was in the middle and the annual net expense ratio was 0.52% with a turnover of 13%. So, what that means is that if you invest $10,000, you will be charged an annual fee of $52. Otherwise, it will be .52 for one share.
The Market Edge Score is 4 and has Market Edge Power Rating of 78.
There is a dividend of $0.19 paid each year and while I do prefer ETF’s that offer more dividends, I did like the 52 week range of $29.55 – $45.78. For me, I heard it’s always strong when the dollar is at its weakest, inflation is increasing and interest rates are falling.
With that being said, I also know there is volatility and you’re going to have your gold bear or bull market throughout the year but I also worry about inflation and how the world does as we go in year two of the pandemic and some countries still not showing any improvement.
Source: Schwab.com
Now this ETF is focused on gold miners.
According to the World Gold Council:
Mine production accounts for the largest part of gold supply – typically, 75% each year. However, annual demand requires more gold than is newly mined and the shortfall is made up from recycling.
Gold Mining and its associated activities does not respond to price changes quickly. There is usually a very long lead time between exploring and finding new gold deposits and mines entering into production.
As it is virtually indestructible, nearly all of the gold ever mined is theoretically still accessible in one form or another and potentially available for recycling.
Recycling is the source of gold supply that is most immediately responsive to the gold price and economic shocks. The majority of recycled gold – around 90% – comes from jewellery, with gold extracted from technology providing the remaining 10%.
Of course, for gold to be of a guaranteed quality, it needs to be processed and refined.
So, there you go. I invested in GDX, to get into learning more about gold mining, without having to take on risks of company/miner-based stocks and I definitely wanted to add something gold-related into my portfolio.
But as always, perform due diligence and do a lot of research before investing. Talk to a financial advisor and find out if VanEck Vectors Gold Miners ETF (GDX) is a perfect investment for you.
Please note that VanEck also offers the VanEck Vectors Junior Gold Miners ETF (GDXJ) which touches upon both gold and silver sectors.
