Every once in a while you just have to get down in the hard data and have a good look.  As it’s Monday, today’s as good a day to jump right in, especially since a nice article about GDXJ’s components came out over the weekend. Back in January, we wrote about trading the junior miners, but since then we haven’t gone in-depth into GDXJ. That’s mostly because there hasn’t been a lot to write about.  Let’s look at the chart.

vaneck vectors chart

Source: Fidelity.com

One year ago – Dec 1, 2017, to be precise – GDXJ opened at 31.64.  Today it’s trading right around 27, and the highest it’s been in between was 36.08.  So nobody’s getting rich off this thing unless they’ve truly mastered the art of very short-term trading.  GLD opened at 120.94 on 12/1/2017 and is in the low 116’s this morning, so it’s been languishing too.  And with zero dividends from GLD and just one-point-one cents from GDXJ over the past year, there’s not a lot of incentive for a traditional buy-and-hold strategy.

The Gold Junior Miners Fundamental Approach

 So how does one go about making any money in the gold junior miners?  Well, one way is the good old-fashioned fundamental approach. You follow the earnings and production reports, put together a spreadsheet, and compare away to find the best value buys in the sector.  Fortunately, someone’s already done that work for you and it’s published here.  It’s up to you to figure out which are the best buys – and you have to be ready to hold for some time, as there’s no immediate jump in the gold market insight.
Besides the details of the spreadsheets, the important thing to note is that GDXJ doesn’t really represent the “real” junior miners anymore.  It hasn’t for some time as it’s crept up into “medium miners” territory.  And one hold in GDXJ is an outright senior miner by any measure.  But as the article points out, GDXJ does represent “extreme value” at this point – it’s only a matter of when the market catches up to it.
Signed, The Gold Enthusiast
DISCLAIMER: The author is long NUGT and JNUG which are closely related to GDX and GDXJ.  These positions are too small to affect the market in any way. The author has no plans to trade these positions over the next 72 hours.

About the Author: Mike Hammer

For 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group More...