After losing for three consecutive months, gold rallied about 2%, its biggest weekly advance since December. A softer U.S. dollar and a sharp pull back in U.S. Treasury yields led to the spike in bullion price. This is because a weak dollar makes dollar-denominated assets attractive for foreign investors while lower yields raised the metal’s attractiveness, as it does not pay interest like fixed-income assets (read:
U.S. Dollar at Four-Week Low: ETFs to Benefit
).
Worsening coronavirus conditions in Europe as well as rising tensions between the United States and Russia added to the strength. This has raised the appeal for the yellow metal as a great store of value and hedge against market turmoil.
Further, a report that top buyer China may import more of the precious metal drove the metal higher. Reuters reported that China, the world’s biggest gold consumer, has given domestic and international banks permission to import a large amount of bullion to meet domestic demand. Moreover, the Fed’s reiteration of his dovish stance on monetary policy helped bullion to move higher.
The bouts of positive news signal renewed momentum for the yellow metal, attracting fresh buying from speculators. Below, we have highlighted five ETFs & stocks with the highest momentum seen last week.
Sprott Junior Gold Miners ETF
SGDJ
: Up 4.9%
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 37 stocks in its basket with Canadian firms making the largest share at 38.8%, followed by Australia (32%) and the United States (10.7%). The fund has amassed $127.4 million in its asset base and trades in a lower volume of around 34,000 shares a day. It charges 50 bps in annual fees from investors.
Global X Gold Explorers ETF
GOEX
: Up 3.9%
The ETF provides exposure to companies involved in the exploration of gold and tracks the Solactive Global Gold Explorers & Developers Total Return Index. It is home to 48 stocks, and Canadian firms dominate the fund’s return at 50.9% followed by Australia (16.9%) and the Britain (15.2%). The fund is unpopular and illiquid with AUM of $55.8 million and an average daily volume of 17,000 shares. Expense ratio comes in at 0.65%.
iShares MSCI Global Gold Miners ETF
RING
: Up 3.9%
This 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 41 securities in its portfolio. Canadian firms take 54.7% of the portfolio, while the United States (23.7%) and South Africa (9%) round out the top three. RING is the cheapest choice in the gold mining space, charging 39 bps in fees and expenses. The fund has been able to manage assets worth $464.6 million and trades in a good volume of 214,000 shares per day (read:
Time for Gold Mining ETFs?
).
Sprott Gold Miners ETF
SGDM
– Up 3.8%
This fund follows the Solactive Gold Miners Custom Factors Index, holding 35 stocks in its basket. Here again, Canada takes the top spot at 77.7% followed by 19.3% in the United States and 2% in the South Africa. The fund has amassed $247.7 million in its asset base and trades in a lower volume of around 52,000 shares a day. It charges 50 bps in annual fees from investors.
VanEck Vectors Gold Miners ETF
GDX
– Up 3.7%
This is the most-popular and actively traded gold miner ETF with AUM of $14.3 billion and average daily volume of around 20 million shares. The fund follows the NYSE Arca Gold Miners Index, holding 54 stocks in its basket. Canadian firms account for 43% of the portfolio, while the United States (20.2%) and Australia (13%) round off the next two spots. The fund charges 52 bps in annual fees.
B2Gold Corp
BTG
: Up 9%
This Zacks Rank #3 (Hold) company is a gold producer with three operational mines (one each in Mali, Namibia, Philippines). The strong performance is expected to continue given that it has a VGM Score of A.
Alamos Gold Inc.
AGI
: Up 6.3%
This Zacks Rank #3 company is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America. It is poised to post substantial earnings growth of 37.5% for this year. The stock has a VGM Score of B. You can see
the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here
.
Golden Star Resources Ltd
GSS
: Up 6.2%
This Zacks Rank #3 company is a gold mining and exploration company that owns and operates the Wassa gold mine, the Wassa underground mine, and a carbon-in-leach processing plant located to the northeast of the town of Tarkwa, Ghana; and the Bogoso gold mining and processing operation. It has a VGM Score of A.
Barrick Gold Corporation
GOLD
: Up 5.1%
This Zacks Rank #3 company is the largest gold mining company in the world. Its earnings are expected to grow 6.1% for this year. The stock has a VGM Score of B (read:
3 Reasons Why Gold ETFs Could Gain Higher
).
DRDGOLD Limited
DRD
– Up 4.4%
This Zacks Rank #3 company is a medium-sized, unhedged gold producer with investments in South Africa and Australasia. It is poised to post substantial earnings growth of 96.2% for the fiscal year (ending June 2021). The stock has a VGM Score of A.
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