Gold Mining ETFs Shine Amid Market Rout

Gold mining ETFs are outperforming this year, driven by a surge in gold price. This is because the mining companies act as a leveraged play on the underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market.

VanEck Gold Miners ETF GDX is leading the pack, jumping 19.5% since the start of the year, followed by gains of 19.3% for iShares MSCI Global Gold Miners ETF RING, 18.7% for Sprott Gold Miners ETF SGDM, 17.7% for Themes Gold Miners ETF AUMI and 16.4% for VanEck Junior Gold Miners ETF GDXJ.

What’s Driving Gold Price?

The ongoing trade tariff disputes and recessionary fears spurred demand for the yellow metal as a safe-haven investment. Gold is often used to preserve wealth during financial and political uncertainty and usually does well when other asset classes struggle. Trump’s fresh tariffs on aluminum and steel imports effective March 12 boosted the safe appeal further. 

Traders are betting that the U.S. economy has lost steam and is on the verge of sliding toward a recession. The barrage of recent data related to surveys and sentiment indicators points to a slowdown in the economy. The tariffs will raise prices for U.S. consumers and dampen economic growth. 

Many Wall Street analysts have raised concerns about stagflation, where growth stagnates, inflation remains high, and unemployment rises. JPMorgan (JPM), Goldman Sachs (GS) and Morgan Stanley (MS) have reduced their respective economic growth targets, citing the anticipated effects of restrictive trade and immigration policies (read: 5 Beaten-Down ETFs to Buy Now). 

PIMCO CEO Mohamed El-Erian told Yahoo Finance that he now sees a 25% to 30% chance of the U.S. economy entering recession this year, up from a 10% chance seen before the Trump tariff bonanza began. Betting markets are pricing in an increasing chance that the U.S. economy will fall into recession. Polymarket placed the odds of a U.S. recession being officially called by year-end at roughly 40% as of Monday, up from a 23% chance on Feb. 27.

Apart from these, central banks are one of the major drivers of gold prices. The banks are dominant buyers of gold as they seek to diversify their reserves away from the U.S. dollar. Strong demand from individual investors in emerging markets, such as India and China, is also acting as a tailwind for the precious metal. According to the latest report from World Gold Council (WGC), global gold demand reached a record high in 2024, driven by sustained central bank buying and growth in investment demand. Central banks accumulated over 1,000 tons of gold for the third consecutive year. Global investment demand increased 25% year over year.

Any Worries?

While the inflationary pressure will benefit the precious metal's status as a hedge against rising prices, it might compel the Fed to pause rate cuts for a longer time, thus reducing the allure of non-yielding gold (read: Will Gold Continue to Shine in 2025?).

Ukraine-Russia ceasefire deal talks will be a headwind for the yellow metal. The United States agreed to resume military aid and intelligence sharing with Ukraine after talks where Kyiv said it would accept a U.S. proposal for a 30-day ceasefire in its conflict with Russia.

ETFs in Focus

Let’s delve into each ETF below:

Market Vectors Gold Mining ETF (GDX)

Market Vectors Gold Mining ETF is the most popular and actively traded gold miner ETF with AUM of $13.8 billion and an average daily volume of around 16 million shares. It follows the NYSE Arca Gold Miners Index, which measures the overall performance of companies involved in the gold mining industry. It holds 62 stocks in its basket. Canadian firms account for about 44.6% of the portfolio, while the United States (16.5%) and Australia (11.1%) round off the top three spots. 

Market Vectors Gold Mining ETF charges 51 bps in annual fees. 

iShares MSCI Global Gold Miners ETF (RING) 

iShares MSCI Global Gold Miners ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 39 securities in its portfolio. Canadian firms take more than half of the portfolio, while the United States takes the next spot at 18% share. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. 

iShares MSCI Global Gold Miners ETF has been able to manage assets worth $1.1 billion and trades in a good volume of 180,000 shares per day.

Sprott Gold Miners ETF (SGDM)

Sprott Gold Miners ETF follows the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 35 stocks in its basket. Here again, Canada takes the top spot at 79.3%, followed by 18.4% in the United States. 

Sprott Gold Miners ETF has amassed $298.9 million in its asset base and trades in a lower volume of around 33,000 shares a day. It charges 50 bps in annual fees from investors. 

Themes Gold Miners ETF (AUMI)

Themes Gold Miners ETF seeks to track the Solactive Global Pure Gold Miners Index, which identifies the largest 30 companies by market capitalization deriving their revenues from gold mining. It holds 31 stocks in its basket, with Canadian firms accounting for half of the portfolio, followed by Australian firms with a 31.4% share (read: Gold Miner ETF Hits New 52-Week High). 

Themes Gold Miners ETF has accumulated $3.8 million in its asset base. It charges 35 bps in fees per year and trades in a lower average daily volume of 3,000 shares.

VanEck Vectors Junior Gold Miners ETF (GDXJ) 

VanEck Vectors Junior Gold Miners ETF offers exposure to small-capitalization companies that are involved primarily in the mining of gold and/or silver and tracks the MVIS Global Junior Gold Miners Index. Holding 86 stocks in its basket, Canadian firms dominate the fund’s portfolio with 50.6% share, while Australia (20.8%) and South Africa (6.8%) round out the top three. 

VanEck Vectors Junior Gold Miners ETF has AUM of $5 billion and charges 52 bps in annual fees. It trades in a heavy volume of around 4 million shares a day on average.

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VanEck Gold Miners ETF (GDX): ETF Research Reports

VanEck Junior Gold Miners ETF (GDXJ): ETF Research Reports

iShares MSCI Global Gold Miners ETF (RING): ETF Research Reports

Sprott Gold Miners ETF (SGDM): ETF Research Reports

Themes Gold Miners ETF (AUMI): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.