First Gold Miners ETF Hits American Market

St. LOUIS () -- It has certainly been a year of firsts for commodity exchange-traded funds.

On the heels of Barclay's silver ETF [AMEX:SLV] and Victoria Bay Asset Management's U.S. crude ETF [AMEX:USO] comes the first U.S.-listed ETF to invest in gold mining companies.

Today, Van Eck Global launched the Market Vectors-Gold Miners ETF [AMEX:GDX], an exchange-traded fund designed to track the performance of the Amex Gold Miners Index [AMEX:GDM].

"We believe that financial advisors and their clients will benefit from innovative ways to gain exposure to these markets," said Jan van Eck, Executive Vice President of Van Eck Global, in a press release.

The benchmark holds 44 mining stocks (see list), with majors like Newmont [NYSE:NEM], Barrick [NYSE:ABX] and Goldcorp [NYSE:GG] and juniors like Crystallex [AMEX:KRY], Golden Star [AMEX:GSS] and Entr'ee Gold [AMEX:EGI]. Also important to note, there are a few silver miners as well.

According to the release, the Index seeks to provide a balanced, diversified approach by including a comprehensive range of small, mid-sized and large companies.

"The Market Vectors-Gold Miners ETF is designed for investors looking for the traditional diversification benefits of gold-related investments as well as the liquidity that intra-day trading access provides," said Joseph Foster, Van Eck precious metals analyst and portfolio manager.

The ETF is suitable for long-term investments, but may also be sold short, thereby acting as a speculative hedging investment, according to the release.

The specialist for the ETF is Goldman Sachs Execution & Clearing, L.P.

However, the timing of today's launch was less than perfect with the Index down 9.9 points (down roughly 100 points in the last five days) and gold futures closing at $657.70/oz (down nearly $100 from highs hit 10 days ago).

Jay Taylor, Editor of J. Taylor's Gold & Technology Stocks, told Resource Investor that gold "just got overcooked," and he was not panicking.

"Gold held up pretty well today," he said. "If it went below $575, $550, I'd be concerned," he added.

According to Taylor, mining stocks have lagged behind bullion for a couple of reasons: mining costs have gone up rapidly and funds are diving more into the metal itself than the stocks.

"Shares will catch up eventually," he added.

Dominic Hilton, spokesperson for Van Eck, also expressed confidence that the market will turn bullish again in the near term.

"We were expecting a pull-back," he told RI. "We see this as temporary."

Foster noted we are in the fifth year of the gold bull market, and current drivers remain in place despite the recent correction.

"We at Van Eck believe that the vulnerability of the U.S. dollar, the twin deficits and other financial imbalances could lead to economic stress that supports a continued positive view on gold-related investments," said Foster.

Fund Price Activity

Market Vectors-Gold Miners ETF opened today at $36.52, gaining 71 cents throughout the day to close at $37.23. Total volume for the day was at 197,100.

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