Has The Junior Gold Mining ETF Lost Its Luster? - ETF News And Commentary

Since Bernanke’s testimony in the most recent Congressional hearing, it has been a tough road for gold. The yellow metal, which is a favorite among both inflation hawks and those looking to protect against economic turmoil, has dropped off of its three month high just below $1,800/oz. and is now sitting well below $1,700, closer to the $1,670 level. This downturn in a little over a week represents a nearly 6.3% loss for gold, erasing much of the gains that investors saw in the entire month of February (read Precious Metal ETFs Slump On Bernanke Testimony).

Beyond Bernanke’s testimony, recent trends in the U.S. dollar have also added to gold’s woes in this time period. The U.S. dollar index now seems poised to break through the $80 barrier, a level the benchmark hasn’t seen since mid January, while Treasury bonds are also seeing declining yields as more investors flow into this safe haven. If this continues and the dollar remains strong, it could diminish the appeal of precious metals, at least in the short term.

Thanks to this, precious metal ETFs have also seen a rough stretch as major gold tracking ETFs—such as GLD, IAU, and SGOL—are all down in the time period too, pretty much matching the yellow metal’s performance over the past week. Yet, this performance seems downright bullish when investors compare it to the status of the gold mining ETFs in the market (read Three Best Gold ETFs).

These ETFs have all outpaced gold bullion on the downside, with some losing more than 10% in just the past five days. By far the worst performing of the bunch has been the Market Vectors Junior Gold Miners ETF (GDXJ) which has lost 12.3% in the time period. This performance is far worse than either of the thinly traded products in the space, Global X’s Pure Gold Miners ETF (GGGG) or the new iShares MSCI Global Gold Miners Fund (RING) which fell by about 10.2% and 9.5%, respectively, in comparison. It also is handily worse than the top dog in the gold mining space, the Market Vectors Gold Miners ETF (