Mining ETF

By: EconomyWatch   Date: 3 August 2009

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A mining ETF invests in the stocks of different mining companies around the world. As the world’s population increases, the demand for natural resources rises as well. Despite the challenges and the high cash volumes required to operate a mining company, the potential of the mining industry has lured many entrepreneurs. Mining ETFs aim at taking advantage of this potential.  

How Do Mining ETFs Work? 

Sponsors of mining ETFs identify mining companies and the natural resources that they supply. Depending on the resources, sponsors invest proportionally. Gold, silver, steel and oil are the safest resources and many ETF sponsors focus acutely on them.

 

Once the portfolio is created, the sponsors market the bouquet of different companies as stocks on various exchanges.

 

Mining ETF: Gold ETF
 

Most of the sponsors prefer to invest more in gold mining companies, as investors around the world consider gold as the best defensive investment. Gold prices maintain a constant progression even in the face of a downturn.

 

Leading Mining ETFs Around the World
 

Many sponsors have introduced attractive mining ETFs with highly diversified holdings. Some of those ETFs are:

  • Global Gold and Precious Metals Portfolio ETF (PSAU)

  • Global Steel Portfolio ETF (PSTL)

  • Market Vectors Gold Miners ETF (GDX)

  • Market Vectors Steel ETF (SLX)

  • SPDR S&P Metals and Mining ETF (XME)

  • Claymore S&P/TSX Global Mining ETF (CMW-TSX)

  • Horizons BetaPro S&P/TSX Global Gold Bear Plus ETF (HGD-TSX)

  • Horizons BetaPro S&P/TSX Global Gold Bull Plus ETF (HGU-TSX)

  • Horizons BetaPro S&P/TSX Global Mining Bear Plus ETF (HMD-TSX)

  • Horizons BetaPro S&P/TSX Global Mining Bull Plus ETF (HMU-TSX)

  • iShares CDN Gold Sector Index Fund (XGD-TSX)

 

Mining ETF: Companies to Watch Out For
 

Before buying a mining ETF, make sure that it contains some or all of these leading mining companies of the world:

  • BHP Billiton Ltd: It is the top producer of iron ore and coal

  • Anglo American PLC: It is the top gold, platinum, diamond and coal miner

  • BHP Billiton PLC: It is the top aluminum, steel and manganese processor

  • Companhia Vale Do Rio Doce: It’s the world’s number one iron ore producer

  • Barrick Gold: It is the world’s number one gold producer

  • Cameco Corporation: It is world’s leading uranium producer

 

Investing in mining ETFs is a good way to diversify a portfolio.

 

 


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