By Chris Dieterich
If you own gold shares, now is the time to reach for your bear canister. Fresh off the heels of a furious seven-month run-up in 2016, miner stocks are smack in the huckleberry patch that marks bear market territory.
The VanEck Vectors Gold Miners ETF (GDX), which tracks shares of Barrick Gold (ABX) and Newmont Mining (NEM), declined 1.1% on Wednesday. It’s the 10th decline over the past 13 trading days and puts the ETF’s price down 19.9% since its Aug. 12 high. Remember that declines in excess of 20% are considered “bear markets.” Another popular ETF that owns shares of smaller miners, the VanEck Vectors Junior Gold Miners ETF (GDXJ), is already in the bear zone, down 21% since peaking on Aug. 11. Barron’s Steven Sears noted prudently last week that “It’s Time to Hedge Bets on Gold Positions.”
Shares of gold-mining companies tend to be volatile and this year is no exception. GDX more than doubled in price from January through July. Investors pumping $16 billion money into exchange-traded funds such as the SPDR Gold Shares (GLD) this year are widely cited as contributing drivers for gold’s rally. That could be running out of steam. GLD has seen $76 million in withdrawals over the past week.