What Investors Should Know About VanEck Vectors Gold Miners ETF (GDX)

vaneck etf

VanEck Vectors Gold Miners ETF (GDX) is an exchange-traded fund founded by investment management firm VanEck during the gold’s bull market in 2006. It is a trading powerhouse and one of the most popular funds in the gold mining sector.

What is GDX?

GDX is a modified market-capitalization weighted index comprised primarily of publicly traded gold and silver mining companies. It tracks the performance of the NYSE Arca Gold Miners Index and seeks to replicate the price and yield performance of this Index. GDX has total assets under management of more than $14 billion and invests at least 80% of it in the depository receipts and common stocks of public mining companies.

GDX is not Limited to US Companies

The ETF’s index was overhauled in 2013 and is no longer limited to U.S.-listed mining companies. It has also included firms mining other precious metals in addition to gold and no longer filter out companies that have hedged their gold exposure with derivatives. The fund is reasonably priced but actual costs can be highly variable.

GDX’s Top Ten Holdings

GDX’s holdings include some of the largest gold mining companies listed in Canada and the U.S. The top ten holdings include Newmont Corporation (NEM), Barrick Gold Corporation (ABX), Franco-Nevada Corporation (FNV), Wheaton Precious Metals Corp. (WPM), Agnico Eagle Mines Limited (AEM), Newcrest Mining Limited (NCM), Kirkland Lake Gold Ltd. (KL), AngloGold Ashanti Ltd. (AU), Kinross Gold Corp. (KGC) and Royal Gold Inc. (RGLD).

Holding Name Ticker Shares Market Value
(US$)
% of Net Assets
NEWMONT CORP NEM US 34,717,616 2,065,003,800 15.57
BARRICK GOLD CORP GOLD US 76,420,957 1,965,547,014 14.82
FRANCO-NEVADA CORP FNV US 8,141,112 1,076,336,418 8.12
WHEATON PRECIOUS METALS CORP WPM US 19,254,635 727,055,018 5.48
AGNICO EAGLE MINES LTD AEM US 10,720,797 629,096,368 4.74
NEWCREST MINING LTD NCM AU 32,465,323 591,136,301 4.46
KIRKLAND LAKE GOLD LTD KL CN 14,248,787 590,284,174 4.45
ANGLOGOLD ASHANTI LTD AU US 21,402,104 521,997,317 3.94
KINROSS GOLD CORP KGC US 64,627,801 427,189,765 3.22
ROYAL GOLD INC RGLD US 3,370,675 413,008,808 3.11
Top 10 Total (%) 67.91

GDX’s Market Cap and Expense Ratio

GDX has a weighted average market cap of $15.42 billion, a price/earnings ratio of 20.12, a price/book ratio of 1.69, and a very low expense ratio of 0.52%. It has an average daily share volume of 57,060,628 and an average daily trading volume of $1.50 billion.  Its average spread is 0.03% with an average spread value of $0.01.  GDX has an MSCI ESG Quality Score of 6.50/10, Peer Group Percentile Rank of 66.67, Global Percentile Rank of 74.35, and SRI Screening Criteria Exposure of 3.89%.

Bottom Line

GDX is particularly risky and considered speculative. It is not made for the casual investor who expects an investment to appreciate over time. It is most appropriate for investors or traders who are bullish on gold and those that fear a financial crisis or inflation. GDX is also suitable for sophisticated investors who are comfortable with a certain amount of risk. Investors need to monitor the management decisions of companies in GDX holdings because their actions have more impact on the ETF than the actual price of gold. Despite some risks, GDX can deliver spectacular returns in the right environment. An example is the period between October 2008 and May 2011 in which gold rose by 150% but GDX rose by almost 300%.