Gold Part 3: mines
This is the third and final part on investing in gold (& Silver), the sequel of part two here.
Gold and gold (silver,..) mines move in a correlated manner; Gold up, mines up. The main distictions are:
- Mines usually make a profit and pay a dividend. Physical gold obviously does not.
- A mine can be good or bad regardless of the gold price. And there are additional risks (strikes, accidents, country risk, ..). So you can bet on gold and gold could go up, but your mine is in trouble and the share price goes down. And vice versa: your mine can go up regardess of the gold price, just because the mine is managed well and grows its operations.
So a gold / silver mine is a kind of mixed bet on the precious metal combined with the mine as a company.
The list of most known mine ETFs
|ETF||Asset Type||Index||TER||Europe?||Dividend||ETF domicile||Size (Billion)|
|iShares Gold Producers UCITS||Gold Mining||S&P Commodity Producers Gold||0.55 %||Y||ACC||Ireland||0.633|
|ComStage NYSE Arca Gold BUGS UCITS||Gold Mining||NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks)||0.65 %||Y||Distr||Luxembourg||0.288|
|iShares MSCI Global Gold Miners||Gold Mining||MSCI ACWI Select Gold Miners Investable Market||0.39 %||N||Distr||USA||0.204|
|L&G Gold Mining UCITS||Gold Mining||DAXglobal® Gold Miners index||0.65 %||Y||ACC||Ireland||0.168|
|Sprott Gold Miners||Gold Mining||Sprott Zacks Gold Miners||0.57 %||N||Distr||USA||0.131|
|Market Access NYSE Arca Gold BUGS||Gold Mining||NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks)||0.65 %||Y||ACC||Luxembourg||0.076|
|VanEck Vectors Junior Gold Miners UCITS||Gold + Silver Mining||MVIS Global Junior Gold Miners||0.55 %||Y||ACC||Ireland||0.076|
|VanEck Vectors Gold Miners UCITS||Gold + Silver Mining||NYSE Arca Gold Miners||0.53 %||Y||ACC||Ireland||0.137|
|Lyxor STOXX Europe 600 Basic Resources UCITS||Mining in general||STOXX® Europe 600 Basic Resources||0.30 %||N||ACC||Luxembourg||0.23|
|VanEck Vectors Global Mining UCITS||Mining in general||EMIX Global Mining Constrained Weights||0.50 %||Y||ACC||Ireland||0.003|
|Global X Silver Miners||Silver Mining||Solactive Global Silver Miners Total Return||0.65 %||N||Distr||USA||0.35|
|iShares MSCI Global Silver Miners||Silver Mining||MSCI ACWI Select Silver Miners Investable Market Index||0.39 %||N||Distr||USA||0.05|
That pretty much sums it up. If you check the performance of these mine ETF’s you may notice that there has not been much positive return over the long term. That is the most important counter-argument against precious metals, in the first place physical, and to a lesser extend ETF’s and the mines: gold is not a company which grows 10 % annually and distributes a 3% dividend. Gold prices have increased 5% annually over the long term with zero dividend.
We are back at square one, the initial argument why to own gold: as the definitive insurance against failing of the financial system, failing economies and currencies, and not as a high-yielding investment. See part 1 on the series.