Market Overview

A Tale Of 2 ETFs: How GDX And GLD Compare When Gold Shines Or Dulls

A Tale Of 2 ETFs: How GDX And GLD Compare When Gold Shines Or Dulls

Gold prices have been on a tear in 2016, making for some happy investors. However, some gold investors are happier than others. The price of gold has jumped 27.0 percent since the beginning of the year. In that same time, the SPDR Gold Trust (ETF) (NYSE: GLD) is up 24.9 percent. The Market Vectors Gold Miners ETF (NYSE: GDX), on the other hand, has skyrocketed 102.9 percent this year.

What is the difference between investing in the GLD and investing in the GDX? Gold miner stocks tend to be much more volatile than gold itself. This phenomenon makes sense because a 30 percent decrease in the price of gold, for example, would likely completely eradicate the margins of most gold miners and put their solvency at risk. However, a 30 percent increase in the price of gold would likely allow a number of gold miners to double or triple margins and income.

Related Link: The Crowded Gold Trade Gets Thinned Out

CXO Advisory crunched the numbers on GLD and GDX last year, comparing their relative performances from May 2006 to September 2015.

Not All That Glitters...

While the GLD’s weekly movements are almost perfectly correlated with the price of gold, CXO found that the GDX’s weekly price movements are only 64 percent correlated with gold.

In the long term, the GDX has demonstrated a slightly negative weekly alpha relative to the GLD, meaning it tends to underperform.

Finally, the GDX has generated a weekly beta of 1.62 relative to the GLD, indicating that every 1 percent change in the GLD suggests a 1.62 percent change in the GDX.

When gold prices fell 30.8 percent from 2012 to 2016, the GLD dropped 34.9 percent, but the GDX plummeted 74.5 percent.

In other words, when gold prices are going up, the GDX is the place to be. However, when they are flat or going down, the GLD is the safer bet. Fortunately for GDX investors, 2016 has been a very good year for gold.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for GLD

Apr 2013Initiates Coverage onStrong Buy
Apr 2013Initiates Coverage onStrong Buy

View More Analyst Ratings for GLD
View the Latest Analyst Ratings

Posted-In: CXOEducation Specialty ETFs Commodities Markets Analyst Ratings ETFs General Best of Benzinga


Related Articles (GDX + GLD)

View Comments and Join the Discussion!

Latest Ratings

ULTADeutsche BankReiterates287.0
LULUDeutsche BankReiterates247.0
YEXTDA DavidsonMaintains16.5
YEXTJP MorganMaintains16.0
YEXTRBC CapitalMaintains20.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

D.A. Davidson Likes What It Sees In Splunk's Q2 Report

Burlington Has 'Lean And Mean' Inventory, Growing Traffic