DataTrader: Mining for Profits in Gold ETFs

Up more than 1% ahead of trading on Thursday, the Market Vectors Junior Gold Miners ETF (GDXJ) has been on a tear over the past several days.

In a steep downtrend since the beginning of September, GDXJ has gained more than 16% over the past week as traders cover short positions in the ETF and value investors have taken advantage of the sell-off to pick up shares of gold mining ETFs like GDXJ at dramatically lower prices.

The question for traders is whether or not GDXJ is a buy or sell in the short term.  And given fund’s recent rally, there is more than ample evidence that traders looking to pick up shares of GDXJ may be able to do so at lower prices in the near term.

Heading into trading on Thursday, GDXJ has become one of the lowest rated ETFs in our database. In fact, the more the fund gains ground in the short term, the more likely the ETF is to run into another round of selling – however brief – as either short term profits are taken, new short positions are initiated, or both.

Like its bigger cousin in the Market Vectors Gold Miners ETF (GDX) and the tracking fund for bullion itself (SPDR Gold Trust or GLD), the GDXJ has been a strong performer in recent days. But until a more enduring uptrend is established, traders and investors are wise to be wary of any short term strength in ETFs like GDXJ.

Quantified data and research on exchange-traded funds like GDXJ is available each evening after the market closes. To learn more, click here.

David Penn is Editor in Chief of