The VanEck Gold Miners ETF (NYSE:GDX), an exchange traded fund that invests in equities of firms operating in the metals and mining, gold, and silver sectors, has risen to levels last seen in early May 2022, driven by big gains in precious metals commodities.
After rising more than 25% in 2023, gold miners are currently the best-performing industry year-to-date, surpassing the VanEck Semiconductor ETF (NASDAQ:SMH).
Backed by fundamentals: Gold prices surged to $2,040/oz on Thursday, approaching fresh 2023 highs as falling producer inflation and increasing jobless claims fueled market speculation about the Fed's rate hiking cycle nearing an end. Gold prices have risen 12% so far in 2023.
Silver also rallied to $25.83/oz, a price last seen a year ago, and has risen nearly 25% in the past month alone.
Five Gold Miners To Watch: The strongest contributors in the previous month to the GDX's performance were Gold Fields Limited (NYSE:GFI) up 53%, Agnico Eagle Mines Ltd. (NYSE:AEM) up 24.3%, AngloGold Ashanti Ltd. (NYSE:AU) up 47%, Barrick Gold Corp. (NYSE:GOLD) up 18%, and Newmont Corp. (NYSE:NEM) up 13%.
Read also: 5 Stocks To Watch After Thursday's Inflation, Jobless Data: Why Netflix, 2 Gold Miners Are Moving
GDX Still Undervalued Compared To Gold Prices
Gold miners, as represented by the VanEck GDX ETF, are catching up to gold, but remain undervalued in comparison to current bullion prices.
As the figure below indicates, historically, there has been an almost perfect link between gold prices and the GDX, which somehow weakened last year.
GDX was trading above $40 per share when gold prices were at this level in July 2020. This correlation might imply that gold miners still have room for gains if gold prices holds these levels or potentially rise further.
GDX vs Gold price – Chart: TradingView
Photo: Shutterstock
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!