A look into GDX and GDXJ
In all commodity sectors underlying stocks can tell a different story than how the actual commodity is trading on spot or future markets. For gold we have a number of different ETFs to look at but GDX and GDXJ show the difference between how investors are viewing larger and smaller companies. Today Doc and I look at the charts of both GDX and GDXJ to better understand the recent disconnect between the stocks and the gold price.
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Cory, can you discuss the allocation issues in GDXJ, many believe this is the cause of the recent weakness
Too Big: Gold Mining Juniors ETF Shows Cracks In Indexing Model
Apr. 16, 2017 (GDXJ) (GDX)
A Solution To The Van Eck Vectors Junior Gold Miners (GDXJ) Problem
Apr. 17, 2017
Junior gold miner ETF gets too big?
Apr. 11, 2017
“There are now 10 Canadian gold miners in which the GDXJ holds more than 18% stakes. For six of those, the fund’s holdings might exceed 20% were it not for a Canadian rule which would force the ETF to automatically extend a takeover offer to all shareholders, according to Scotiabank.”
“The fund has also had to do some fancy footwork not to run afoul of U.S. concentration requirements. Among the moves has been to buy names not in the underlying index. GDXJ now has five holdings totaling 25% of AUM that aren’t part of the index – among them is another ETF, the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX), which focuses on far larger firms.”
“One issue pumping up assets is the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEARCA:JNUG). Scotiabank believes most of the asset growth in GDXJ is the result of hedges for JNUG (where AUM has climbed to over $1B from $100M a year ago).”
https://seekingalpha.com/news/3256617-junior-gold-miner-etf-gets-big
Junior Gold Miner ETF Suspends Creation Orders Due To Shortage Of Underlying Instruments
Apr 15, 2017
‘That’s The Most Horrible Thing I’ve Ever Heard’
Apr. 14, 2017
“One day, someone is going to look back at the proliferation of ETFs and wonder how everyone could have been so naive.”
“Outside of some geopolitical catastrophe, ETFs almost unquestionably represent the biggest risk to markets – and this risk is at the structural level.”
https://seekingalpha.com/article/4062520-thats-horrible-thing-ever-heard?ifp=0
Popular Gold Miner ETF To Change Dramatically
April 17, 2017 – SUMIT ROY
http://www.etf.com/sections/features-and-news/popular-gold-miners-etf-change-dramatically?nopaging=1
Thanks for the links, Excelsior. Very interesting timing, given the tight BBands on JDST, and the reverse split coming.
It explains a bunch of the weird movement in GDXJ lately, and their rebalancing and reshuffling of the deck explains why many of the miners held inside of GDXJ are selling off a bit more than expected recently. The fact that the “JR” mining index is going even further up the foodchain in market cap size, so as not to trigger concentration rules, shows why they can’t really maintain a real Jr focused ETF with the size and volatility of their ETF. Basically their whole reason for existing to give investors access to the JR miners is turning into a farce as they rotate into larger and more liquid companies. The fact that they’ve had one of the top weightings in their Junior fund as GDX (the Majors and Streamers) shows just how dysfunctional their ETF has been at matching it’s core mission and guidelines.
This is just another reason why I’d rather buy individual shares and build my own ETF.
Dang thing is manipulated ……..worrisome is the FEDsters and govt.
with all the events happening around the world…..gold should realistically be UP……
JNUG……good indication …
French Revolution …….no matter who wins………zerohedge
US…deploys Two more air craft carriers to N.Korea ….zerohedge
Tom Toms are beating…….Trump is on the war path………
Fair’s fair, the North Koreans have two submarines of the coast of California.
(they’re harder to detect and keep track of than planes! Also don’t need refuelling so often!
Those guys on the sub are on a govt vacation…..Hollywood will be using them in the next film…”Kimmy goes to Hollywood”
Actually, Kim is on the sub, ….story is, he is looking for a new hair stylist, ..and was told he should look in LA..
Hahaha! Good one.
🙂
How would anyone really know, but, reports are that n.korea has only one nuclear armed sub, the subs they may have off the american coast are supposedly noisy.
Meaning they can be sunk at will.
I guess if they sat still they wouldnt be found so easily and could sink sumtin…maybe.
Gotta give the americans some credit.
The main threat would be to s.korea, guam maybe,okinowa and the american fleet near korea.
One nuke could ruin the entire american fleets whole day.
The way I see it is should n.korea have a few nukes, the american fleet must be a sacrifice, wouldnt be the first time the americans have done that.
Fake news…….boogie man , someone has to scare the americans into action…..Neocon delight.
The american’s are borrowing the sonic boomer from the Russians, and will be using it on any Nukes flying out of Kim’s nukey nest.
?
Remember the Russians used it on the American last year to jam the electronic devices on the US Navy ships….”sonic boomer”wrong terminology, some type of jamming device which shuts down all electric components.
I was never sure that thing exists.
Im far more convinced of thousands of tons of gold stashed.
Nothing to worry about……..KIM will be eliminated by Dennis Rodman in a one on one basketball show down……winner takes all. Dennis will win, but, will forget to pay the foreign tax, and the IRS will have to take his nose ring in final payment.
off not of
Meanwhile in Egypt:
https://www.youtube.com/watch?v=dViOdQY4mD8
And in Turkey:
Turkey off to a great start…….dictatorship here we go………
Make up the rules as you go, and stuff the ballot box
Turkey can kiss the E.U. goodbye now. Praise Allah!
Thanksgiving for the Turkey…….allahween coming soon……
OOTB…now that is funny…regards
🙂
Kind of depressing that the EU did not see the opportunity in getting Turkey in 10 years ago, when the Turks where really interested in getting in to the EU. Now when all member countries are having referendums on leaving, there is no idea of entering the EU. Now the Turks will probably orientate towards China…
The great hypster friedland
https://api.soundcloud.com/tracks/317503002/download?secret_token=s-y6U3J&client_id=cUa40O3Jg3Emvp6Tv4U6ymYYO50NUGpJ