The Market Vectors Gold Miners GDX Exchange Traded Fund
is a financial security that is traded on the New York Stock Exchange
. It is representative of the Gold Mining industry as a whole, with its current top holdings coming from the Barrick Gold Corporation
, closely followed by Goldcorp Incorporated
, and thirdly the Newmont Mining Corporation
Since its inception, the GDX ETF has seen a comparable price pattern to the HUI gold stock index
. In fact almost 99% of price fluctuations in the GDX can be equally displayed by the daily price action in the HUI.
Like most Exchange traded funds
the GDX can be used almost exactly like a share in a single company, accept its value is pooled from the whole industry and not just one company on the exchange, allowing for immediate diversification of your portfolio. It can be bought and sold at any time throughout the day (unlike some mutual funds
), and the price will fluctuate at any given time like ordinary shares. People choose to buy in to the GDX because it is more secure and diversified than one single company and it can alleviate the time and research needed to invest effectively in a single company.
Although physical gold itself holds its value like no other asset, it also sees very little return because it is so stable; meaning it rarely fluctuates. Thus investing in gold
is often seen as pointless unless there is a major economic meltdown it which money seriously loses its value at a dramatic weight. Investing in Gold stocks
allows you to invest in the security of gold, whilst reaping the rewards of fluctuating stock value. In fact this can be very volatile.
The GDX should not be confused with the GLD
, which keeps track of the price of gold as opposed to actual gold stocks like the GDX.
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