Time to Buy Market Vectors Gold Miners ETF?
Source: Seeking Alpha (1/12/09)
". . .if history is any indicator and the Gold/XAU ratio holds up, we could see more appreciation in GDX. . ."
Currently, the Gold/XAU ratio is well above 5, according to Kitco.com. The ISM Purchasing Managers Index was 36.2 in November. GDX is currently the closest ETF to tracking the XAU that I am aware of; however, the holdings do not mirror the XAU exactly. GDX has already seen significant appreciation since October; but, if history is any indicator and the Gold/XAU ratio holds up, we could see more appreciation in GDX or declines in the spot price of gold before reaching a ratio of 5 or less. One potential strategy would be to go long GDX and/or short GLD. Or, trusting John Hussman's research, simply purchase the individual securities in the XAU without hedging by shorting GLD.