As hedging falls out of favor, gold mining companies and ETFs will become more closely linked to the price of gold.
That’s the trend behind the Wall Street Journal story Taking Down the Golden Barrickades. Barrick Gold, the world’s largest gold mining company, is the last in the industry to unwind its hedge book. Once the unwinding is complete, Barrick and other gold mining stocks will be more sensitive to the ups and downs of gold which recently topped $1,000 per ounce.
Two ETFs with large holdings of Barrick include the Market Vectors Gold Miners ETF (GDX) and PowerShares Global Gold and Precious Metals Portfolio (PSAU).
GDX has Barrick as its largest holding with 12.54% of the portfolio invested in the company. Other top holdings include Goldcorp and Newmont Mining. The fund carries a net expense ratio of 0.55%.
In addition to Barrick, Goldcorp and Newmont, PSAU has Anglo Platinum and Impala Platinum among the fund’s top 5 holdings. The ETF’s expense ratio is 0.75%.