New ETF Provides Access to Junior Miners
Source: Seeking Alpha, Jeff Nielson (6/15/09)
". . .what makes this new product unique is that it will be comprised solely of junior miners. . ."
This new ETF will be offered by Van Eck Global. It is not their first precious metals mining ETF, as they already have an ETF for gold miners: GDX. However, what makes this new product unique is that it will be comprised solely of junior miners in the precious metals sector.
American investors already have access to most Canadian junior miners. However, this comes primarily via "pink sheets" listings—a market shunned by more conservative investors, and those who lack a sophisticated understanding of these companies. Thus, this is the first mainstream vehicle for U.S. investors to invest in these companies.
For Canadian investors, the opportunity is not quite as clear-cut. Canadians already can invest in many of these companies through their TSX listings; however, they must make their purchase in U.S. dollars. With the U.S. dollar on a clear, downward trajectory (and the Canadian dollar rising, inversely), holding U.S. dollars adds significant risk to this investment.
When I decided to begin managing my own portfolio, one of the reasons why I chose to focus on the mining sector was because I saw it as one of the easier sectors in which to quickly gain an understanding. The other, even more obvious reason was that it was clear to me that commodity producers were in the early stages of a multi-decade bull market—with last year meltdown being an interruption rather than end to this long-term trend.
I would encourage all investors who currently do not have exposure to Canadian junior miners to seriously consider this ETF once it is officially launched. With the horrific losses that we all sustained over the last year, this is an opportunity to reverse some of those losses with an investment vehicle that offers superior, potential returns to any direct investment in bullion itself.