GDX ETF
The Market Vectors Gold Miners
GDX Exchange Traded Fund is a financial security that is traded on the
New York Stock Exchange. It is representative of the Gold Mining industry as a whole, with its current top holdings coming from the
Barrick Gold Corporation, closely followed by
Goldcorp Incorporated, and thirdly the
Newmont Mining Corporation.
Since its inception, the GDX ETF has seen a comparable price pattern to the
HUI gold stock index. In fact almost 99% of price fluctuations in the GDX can be equally displayed by the daily price action in the HUI.
Like most
Exchange traded funds the GDX can be used almost exactly like a share in a single company, accept its value is pooled from the whole industry and not just one company on the exchange, allowing for immediate diversification of your portfolio. It can be bought and sold at any time throughout the day (unlike some
mutual funds), and the price will fluctuate at any given time like ordinary shares. People choose to buy in to the GDX because it is more secure and diversified than one single company and it can alleviate the time and research needed to invest effectively in a single company.
Although physical gold itself holds its value like no other asset, it also sees very little return because it is so stable; meaning it rarely fluctuates. Thus
investing in gold is often seen as pointless unless there is a major economic meltdown it which money seriously loses its value at a dramatic weight. Investing in
Gold stocks allows you to invest in the security of gold, whilst reaping the rewards of fluctuating stock value. In fact this can be very volatile.
The GDX should not be confused with the
GLD, which keeps track of the price of gold as opposed to actual gold stocks like the GDX.
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