Saturday, June 18, 2016

Forget About SGDJ - GDXJ Is Even Better

A few of my readers noticed that GDXJ is even better ETF than SGDJ. Definitely, they are right and I was wrong in my last article.

Here is the chart showing the relative strength of GDXJ against SGDJ:

As usually, it is clear that both ETFs have been in their uptrends since January 2016 (the violet vertical line - a start of the ongoing bull market in gold). 

However, GDXJ has been stronger than SGDJ - look at the panel in the middle and the green down-trending line.

Now, let us look at the GDXJ top 10 holdings:

Five companies are these same miners as those held by SGDJ (Alamos, B2 Gold, First Majestic, IamGold and Osisko Gold). The next five are different (Pan American, Hecla, Centamin, Nova Gold and Pretium).

Well, there is quite a big difference between these two ETFS (I mean their 10 top holdings):

  • GDXJ is more about silver (there are three silver miners in the GDXJ 10 top holdings: First Majestic, Pan American and Hecla; as for SGDJ - there are only two silver producers: First Majestic and Coeur); it is an advantage of GDXJ over SGDJ - during bull markets in precious metals silver prices are stronger than gold ones
  • GDXJ is more risky than SGDJ - such companies as Nova Gold and Pretium are development-stage miners where no gold is delivered; however, note that higher risk means, as a rule, higher profit

Summing up - forget about SGDJ; GDXJ is better...

...and hats off to my intelligent readers.

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