An Introduction
Prevailing gold prices overwhelmingly drive gold mining profits and, looking at the performance of 4 gold mining category ETFs – producer, developer, explorer and royalty/streaming – relative to the current gold bullion price (referred here as the GE-to-GB or GE/GB Ratio) provide the extent of under- or over-evaluation of the stock category where the higher the ratio the better and both the Ratio and the MunAiMarkets Gold/Silver ETFs Model Portfolio were UP w/e April 11th, MTD and YTD and rising month after month.
The GE/GB Ratio
The Ratio ended 2024 at a very low level and, historically, very low levels have always been followed by major gold stock up-legs according to Adam Hamilton – and gold miners tend to not only mean revert to normal GE/GB levels, but overshoot proportionally to the upside. The GE/GB Ratio was UP 18.5% this week and is now UP 6.5% MTD and UP 38.7% YTD and that portends to a coming massive surge in gold stocks – and silver stocks, too.
The MunAiMarkets Gold/Silver ETFs Model Portfolio
- The VanEck GOLD Miners ETF (GDX): UP 19.2% w/e April 11th; UP 9.1% MTD; UP 44.6% YTD
- consists of producer companies that operate fully functioning mines that extract and sell gold
- # Holdings: 63
- Average Market Capitalization: $23.0B
- GE/GB Ratio: UP 12.1% w/e April 11th; UP 4.4% MTD; UP 19.3% YTD
- The VanEck Junior GOLD Miners ETF (GDXJ): UP 19.2% w/e April 11th; UP 7.7% MTD; UP 43.2% YTD
- consists of developer companies that take over once explorers find a promising deposit conducting feasibility studies to determine if the deposit can be mined profitably, work on securing permits, financing, and planning the construction of the mine.
- # Holdings: 88
- Average Market Capitalization: $6.0B
- GE/GB Ratio: UP 11.4% w/e April 11th; UP 10.0% MTD; UP 16.1% YTD
- The Sprott Junior GOLD Miners ETF (SGDJ): UP 11.8% w/e April 11th; UP 1.3% MTD; UP 10.9% YTD
- consists of explorer companies that are searching for new gold deposits
- # Holdings: 35
- Average Market Capitalization: $4.0M
- GE/GB Ratio: UP 9.0% MTD; UP 7.4% YTD
Sub-Total: Gold ETFs UP 19.2% w/e April 11th; UP 7.8% MTD; UP 42.2% YTD on average; GE/GB Ratio UP 11.7% w/e April 11th; UP 2.7% MTD; UP 14.2% YTD
- The Global X Silver Miners ETF (SIL): UP 15.8% w/e April 11th; UP 1.8% MTD; UP 26.6% YTD
- consists of explorer companies that are searching for new silver deposits by conducting geological surveys, drilling, and sampling and are referred to as “junior” mining companies.
- # Holdings: 35
- SIL to SLV Ratio: UP 7.8% w/e April 11th; UP 8.7% MTD; UP 14.0% YTD
In addition, below is how a representation of royalty/streaming company ETFs performed MTD and YTD:
- The U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU): UP 17.4% w/e April 11; UP 8.4% MTD; UP 41.5% YTD
- consists of companies (merchant “bankers) that provide alternative financing to mining companies by purchasing future production (i.e. streaming) or revenues (royalty) in exchange for upfront cash payments.
- # Holdings: 28
Summary
In total, the above 5 gold/silver related ETFs encompass 87% of the gold/silver ‘mining” sector (i.e. 253 companies) and they were UP 18.4% w/e ending April 11th; UP 6.7% MTD and UP 39.0% YTD.
In addition,
- The SPDR® Gold Shares ETF (GLD) is UP 6.6% w/e April 11th; UP 4.9% MTD and UP 23.0% YTD and the iShares Silver Trust ETF (SLV) is UP 7.8 w/e April 11th; DOWN 5.8% MTD and UP 10.9% YTD.
