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How Battery Metals Have Helped Us Outperform During the Slump in Gold Price March 7, 2021
Gold hasn’t been getting much love from investors lately due to rising bond yields, and bullion-backed gold mutual funds and ETFs have seen significant outflows so far this year through the end of February.
Before pulling your money out, though, I would advise investors double-check what’s in the fund. During this period, we’ve managed to outperform many of our peers thanks to a substantial rotation into metals and minerals that will increasingly be needed in advanced technology, including lithium-ion batteries. Besides lithium, we like copper, nickel, cobalt and graphite, and we see great upside potential in companies that not only produce these minerals but also develop the technology behind the batteries.
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Before pulling your money out, though, I would advise investors double-check what’s in the fund. During this period, we’ve managed to outperform many of our peers thanks to a substantial rotation into metals and minerals that will increasingly be needed in advanced technology, including lithium-ion batteries. Besides lithium, we like copper, nickel, cobalt and graphite, and we see great upside potential in companies that not only produce these minerals but also develop the technology behind the batteries.
Further down, I’ll be sharing one of these companies with you and how it’s helped us outperform during the gold correction.
VanEck Vectors Junior Gold Miners ETF (NYSEARCA:
GDXJ) are set for their quarterly rebalancing on March 19. This upcoming rebalancing event should further reduce the overlap between the two exchange-traded funds.
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RBC analyst Wayne Lam expects the Junior Gold Miners ETF to keep adding companies. He noted that investors have become increasingly focused on the junior end of the GDXJ. Lam believes this means there is an increase in the number of firms that are eligible for inclusion. The GDXJ added almost 30 new junior gold companies last year, including 10 in the fourth quarter.
He also sees an emphasis on gradually reducing the overlap between the GDXJ and the GDX. Lam said the two ETFs overlap by almost 50% in the companies they include and 70% in market capitalization. The market cap overlap has declined from an average of 80% in 2018 and 2019.
Gold Miners taking leave of absence for rest of season saultthisweek.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from saultthisweek.com Daily Mail and Mail on Sunday newspapers.