But what the mining stocks did here defies description. Of course, I was aware that the mines will also fall if stocks collapse and gold is sold. The worst possible environment for mines. And so the movement was ugly until Wednesday, but it was to be expected. But what happened on Thursday and especially Friday on the mine ETFs GDX and GDXJ can no longer be explained with logic.
GDXJ: Strange trading on Thursday
Let’s start on Thursday: Towards the end of trading, there was extreme selling pressure on the junior mine ETF GDXJ. The index lost over 26 percent of its value within a few hours. Just to clarify: We are not talking about an ETF in which mainly exploration stocks are listed. The largest positions are Northern Star, Kinross, Sibanye, Pan American Silver, Gold Fields, Yamana, Evolutiuon and B2Gold – larger producers. And none of those stocks lost 26 percent or more that day. The result: the ETF lost more than the stocks that were listed in it. So he went from trading with a discount to the NAV. This is unusual and in itself an absurdity.
GDX at the 2016 level – but not the stocks
But if the ETF came under so much pressure, then the mining stocks it contains would have to drop to the lowest level since early 2016. Since Newmont, Barrick and Franco have almost 35 weightings, let’s take a look at these stocks:
Barrick was trading below $ 10 in early 2016, currently over 50 percent higher. Newmont was trading at around $ 20 in early 2016, currently at $ 39.50. So almost 100 percent higher. Finally, Franco-Nevada was trading below $ 50 in 2016, currently at $ 89. Even if we have to take into account that the calculation is somewhat falsified by the takeovers of Goldcorp and Randgold by Barrick and Newmont, the discrepancy that arises here is enormous.