Thoughts On The New Gold Miners ETF
Interest in gold as a holding within long-term, buy-and-hold portfolios has skyrocketed in recent years, thanks to both the rapid price appreciation of the yellow metal as well as developments in the ETF industry that have made this asset class more accessible than ever before. In addition to physically-backed gold ETFs such as IAU and GLD–which have about $80 billion in assets between them–investors have embraced “indirect” exposure to gold miners through stocks of companies that discover, extract, and sell the precious metal. Because the profitability of these companies depends on the prevailing market price for the assets they sell, these stocks should tend to move in unison with spot gold prices–at least over the long run.