The gold market has stabilised in recent weeks with its move into Christmas will likely be determined by Fed commentary next week i.e. they’re likely to cut, however, Gold probably needs further dovish rhetoric to go on with the advance. Whenever doubts creep into the market around how fast Jerome Powell will cut rates, the precious metal struggles with related stocks following suit. The ASX gold stocks are a refreshing and rare example of where local investors have enjoyed outperformance compared to their overseas peers with the GDX ETF tracking the gold price and remaining below its October high.
- The ETF holds 85 stocks, with its 5 largest positions currently Newmont, Agnico Eagle Mines, Barrick Mining, Wheaton Precious Metals, and AngloGold.
- It has a large $1.4bn market cap, backed up by $US23.9bn in its US parent, around 11% of the ETF is in Australian names while its fees are a reasonable 0.53%.
Golds recent savage ~22% correction illustrates the risk around crowded trades and one of the reasons we are becoming a little cautious towards the resources i.e. nobody is expounding a sell on copper! We expect a choppy ride over the coming weeks, because of how mature the advance is but MM believes the underlying bull market does remain alive and well.
- We are looking for the GDX ETF to ultimately test the $135-40 area over the coming months.
MM is bullish towards the GDX ETF short-term
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