Markets

And You Thought A Great Run For Gold And Silver Funds Was Over?

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What seemed like a sprint for precious-metal mining ETFs now has the makings of a marathon.

SPDR Gold Shares ( GLD ) surged early in 2016, a solid comeback after three consecutive years of losses. The bellwether commodity ETF then took a breather in March, but saw another burst of energy in April, pumping up 5%.

A standout season bodes well for this asset class, according to VanEck, a provider of innovative fund investments.

CEO Jan van Eck believes commodities have bottomed, as global demand -- whether it's for natural gas, oil or metals -- has at long last caught up to oversupplied conditions.

As a provider of commodity-related exchange traded funds, VanEck may seem to have an obvious ax to grind. But he buttresses his view of a bright outlook with this reasoning:

  • Negative and near-zero interest rates around the world are "fantastic for gold because gold doesn't pay a coupon, unlike bonds or stocks that pay dividends."
  • China does not face a systemic risk, although the outlook for its old and new economy sectors is "lumpy." The country is considered the world's largest importer, consumer and producer of gold.
  • U.S. stocks still look pricey and will continue to "muddle along" even as corporate earnings recover and the dollar headwind abates. Meanwhile, commodities are at a positive inflection point.

The bottom line for van Eck: "This is a great longer-term opportunity. Don't obsess about the correct entry point."

VanEck on Monday announced a new branding name, renaming its Market Vectors ETFs as VanEck Vectors ETFs. VanEck Vectors Gold Miners ( GDX ) was up 88% this year through Friday.

Commodities can help to cushion portfolios in periods of stock market volatility, as 2016 has shown.

IShares MSCI Global Gold Miners ( RING ) made a 52-week high Thursday. RING soared 56.2% in Q1, and an additional 30.4% in April.

Last month, it saw $8.5 million in net inflow, growing assets to $133.1 million.

The ETF's largest country exposure is Canada at 55%, followed by the U.S. at 17% and South Africa at 13%, according to industry monitor Xtf.com. The top three stocks out of 29 holdings are Barrick Gold ( ABX ), Newmont Mining ( NEM ) and Goldcorp .

The ETF has a Relative Strength Rating of 98, which means it is outperforming 98% of all stocks and exchange traded funds tracked by IBD.

It has a strong Accumulation/Distribution of A-, a sign of institutional backing.

IShares MSCI Global Silver (SLVP) also made a new high Friday. SLVP vaulted 48.2% in Q1 and 40% in April.

Last month, the ETF absorbed $11.7 million. Assets under management now total $43.2 million.

Few of its 29 stock holdings are pure-play silver mining companies. The index merely requires holdings to earn a majority of their revenue from silver mining. Silver Wheaton (SLW) is the portfolio's largest stock.

The RS line bolted higher on Friday, a sign of outperformance vs. the S&P 500.

PowerShares DWA Basic Materials (PYZ) allocates 31.5% of portfolio assets to metals and mining stocks.

The ETF made a 52-week high of 55.40 on the stock market today.

Meanwhile, RING and SLVP pulled back in heavy volume Monday.

Mining stocks tend to reflect the price moves in the underlying commodity.

Gold futures prices scored a 15-month high of $1,306 in morning trade Monday, before backing off as investors booked some profits, according to Kitco News.

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


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

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