Don't Overlook Gold Miner ETFs

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"Beyond physical bullion, there are options gold-hungry investors should consider."

The Street, Don Dion

Beyond physical bullion, there are options gold-hungry investors may want to consider including gold miner-backed funds like the Market Vectors Gold Miners ETF and Market Vectors Junior Gold Miners ETF, both of which spread their assets across a wide collection of global gold producers.

There are a number of benefits to owning gold miners.

For one, the equity exposure gained through holding a miner-focused fund like GDX will be beneficial when the markets eventually get back on track. The companies underlying this fund are primarily dedicated to the production of gold and will therefore benefit as investors clamor for exposure to the resource. However, it is important to note that, like other market sectors, gold miners also do well during times of market optimism.

Secondly, although they have lagged against their physically-backed cousins throughout the metal's staggering 2011 run up, gold miners have a long history of outperforming bullion during periods in which gold has risen sharply.

As Barron's recently pointed out, the lagging performance of many top gold miners has left them primed for strength. A combination of rising profits, abnormally low P/E ratios, and strong demand bodes well for these firms' prospects going forward. In the event of a breakout, there is a good chance GDX could provide leveraged-like returns.

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