Investors increased their investments in the ETF largest gold mining companies

07 Oct 2016

Over the past two months, investors have put up $2.174 billion in the Market Vectors Gold Miners ETF (GDX), the largest ETF of gold mining companies, despite the fact that its shares dropped during this period by nearly 30%. The largest inflow of funds - $358 million – within a single day was recorded on Tuesday, against the drop of the gold prices by more than 3% in anticipation of the Fed's interest rate hike. Today at 16.30 MSK, the September nonfarm payrolls figures from the U.S. will be published, which can significantly affect the Fed's determination to raise the rate. It is expected that 170 thousand jobs has been created in the past month, and the unemployment rate has remained at 4.9%. The gold prices rose by 18% since the beginning of the year. Demand for ETF rose after large gold mining companies tracked by Bloomberg, halved their net debt, increased EBTDA over the past two years. The costs have fallen by 26% since June 2013, while the profit before tax increased by more than double in Q2 compared with the previous three months. GDX has risen in price by about 66% this year, becoming the growth leader among all ETF shares tracked by Bloomberg with a market value of more than $5 billion. Among the largest component of its portfolio - Barrick Gold Corp. and Newmont, the largest gold miners by market value. After showing the best result for the half year since its founding in 2006, ETF declined in Q3 as investors took profits in anticipation of Fed rate hike, which will limit the investment attractiveness of the interest-free gold. At the same time, long-term investors increased their assets in GDX by 20%, highest ($2.3 billion) since 2011, when prices for the precious metal reached a historical peak.