One ETF I’ve been pounding the table on in recent months is the VanEck Vectors Gold Miners ETF (TSX:GDX), and I think now represents an excellent buying opportunity for investors for a few reasons.
First, this ETF has performed well of late, but not well enough in my view given where gold prices are right now. With gold hovering around $1,850 U.S. per ounce, the ETF is now trading more than 20% below its 52-week high and is also approximately 50% lower than levels seen back in the 2011 boom we saw in gold prices following the financial crisis when gold prices were hovering around these levels.
As far as gold miners go, on an adjusted basis (adjusting for the price of gold primarily), these companies are now the cheapest they’ve been in around 30 years. This means investors can get access to the entire gold mining and production sector at a massive discount, a fact that should bring tears to the eyes of any value-oriented investor, given the relative dearth in good value options available in financial markets today.
Another reason this ETF is particularly attractive to me is the relatively low management expense ratio. While the ETF’s MER does sit slightly higher than 0.5%, compiling a fully diversified portfolio of gold producers, particularly those with listings that make them more difficult or expensive to trade, is expensive. This is by and large the cheapest and most efficient way for any investor to gain excellent exposure to precious metal producers today.
Invest wisely, my friends.
