Gold Part 3: mines

Gold Part 3: mines

March 8, 2019 1 By admin

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.

Image result for gold mine icon

The list of most known mine ETFs

ETFAsset TypeIndexTEREurope?DividendETF domicileSize (Billion)
iShares Gold Producers UCITSGold MiningS&P Commodity Producers Gold0.55 %YACCIreland0.633
ComStage NYSE Arca Gold BUGS UCITSGold MiningNYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) 0.65 %YDistrLuxembourg0.288
iShares MSCI Global Gold Miners Gold MiningMSCI ACWI Select Gold Miners Investable Market 0.39 %NDistrUSA0.204
L&G Gold Mining UCITS Gold MiningDAXglobal® Gold Miners index0.65 %YACCIreland0.168
Sprott Gold MinersGold MiningSprott Zacks Gold Miners0.57 %NDistrUSA0.131
Market Access NYSE Arca Gold BUGSGold MiningNYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks)0.65 %YACCLuxembourg0.076
VanEck Vectors Junior Gold Miners UCITSGold + Silver MiningMVIS Global Junior Gold Miners0.55 %YACCIreland0.076
VanEck Vectors Gold Miners UCITSGold + Silver MiningNYSE Arca Gold Miners0.53 %YACCIreland0.137
Lyxor STOXX Europe 600 Basic Resources UCITSMining in generalSTOXX® Europe 600 Basic Resources0.30 %NACCLuxembourg0.23
VanEck Vectors Global Mining UCITSMining in generalEMIX Global Mining Constrained Weights0.50 %YACCIreland0.003
Global X Silver MinersSilver MiningSolactive Global Silver Miners Total Return0.65 %NDistrUSA0.35
iShares MSCI Global Silver MinersSilver MiningMSCI ACWI Select Silver Miners Investable Market Index0.39 %NDistrUSA0.05

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.