Volatility continues to characterize the commodities markets, and we have seen a downside correction in the VanEck Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) of about 17.3% since August 5th. Of course, this negative activity follows a tremendous surge in bullish momentum on longer-term time horizons. Since March 13th, GDXJ has generated gains of more than 183%, and we expect safe haven buying of precious metals to continue against rising macroeconomic uncertainties (such as the recent reports of coronavirus in the U.S. government). Overall, we believe that this environment should help the junior gold miners maintain positive momentum in upcoming earnings reports, and we rate GDXJ as an instrument that is likely to “outperform” based on its broadly diversified exposure to a sector of the market that is benefitting from an acceleration in momentum.
Source: Author via Tradingview
The VanEck Vectors Junior Gold Miners ETF is associated with an expense ratio equal to 0.53%, and the fund currently has $5.87 billion in assets under management. One of GDXJ’s distinguishing features is that it offers broad regional exposure that is diverse, and this element can be a helpful factor when investors seek to reduce additional risks associated with certain geographical areas:
GDXJ’s 10 largest holdings count for 43.16% of the fund’s total valuation, and this is positive because figures under 50% will generally indicate favorable diversification levels. Two of the VanEck Vectors Junior Gold Miners ETF’s most important holdings include Northern Star Resources (OTCPK:NESRF) and Gold Fields Limited ADR (NYSE:GFI).
Positive earnings trends from both of these companies appear to be showing bullish momentum that could carry over into upcoming quarters, and we might see further gains in the VanEck Vectors Junior Gold Miners ETF if these companies are able to produce results that are aligned with these upbeat