It’s been a banner year for spot gold and shares of miners. That’s reflected by the WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN ). That fund provides exposure to gold futures and a basket of mining equites.
In fact, GDMN’s 84.46% YTD return (as of June 11) exceeds the combined returns of the largest spot gold and gold miners ETFs. That’s an impressive feat to be sure. But it’s one that may also imply further 2025 upside for miners may be limited. That’s not necessarily the case. But it’s an interesting scenario that indicates why GDMN could continue delivering in the back half of the year.
Put simply, gold and stocks are rallying at the same time. The former has been the better performer this year. But it’s unusual for both asset classes to do at the same. Add to that, both are flirting with record highs simultaneously and that’s truly rare. History indicates that situation often bodes well for miners.
Gold ETF GDMN Could Be a Valuation Play
One of the most widely observed gauges of gold mining stocks is up more than 58% this year. So investors can be forgiven if they assume those stocks are now richly valued. However, they’d be wrong. That’s because the consensus on Wall Street is that gold miners remain underowned and undervalued.
“A recent note from Jefferies analysts echoed the sentiment, suggesting that many mining equities are still trading far below their intrinsic value, despite bullion’s record-setting climb. As a result, some of the biggest gains in the next phase of this bull market may come not from gold itself — but from the companies pulling it out of the ground,” reported BayStreet.
Beyond the attractive valuations offered by gold miners, including GDMN holdings, a familiar catalyst is supporting bullion’s 2025 bullishness: central bank buying. Those purchases, coupled with gold’s surging value, have made the yellow metal the second-largest reserve asset in the world. That’s according to a report out Wednesday from the European Central Bank (ECB).
“The share of gold in global foreign reserves at market prices reached 20% at the end of 2024, surpassing the euro at 16%, while the U.S. dollar still led but extended a steady decline to 46% of global reserves,” according to Seeking Alpha, citing the ECB.
Other data points are also bullish for gold and ETFs such as GDMN.
'Profit-Taking May Be Over'
“The number of funds increasing exposure via gold long futures positions was very significant over the course of the [week. They rose from 88 funds to 106. That perhaps points] to the fact that profit-taking may be over and bullish momentum is back,” according to a recent report from Société Générale.
This article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional.
WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.
For more news, information, and analysis, visit the Modern Alpha Channel.
