RE: Gold price...26 Apr 2017 08:16
Lots of laughter at 4H00, seer!!!! Below pasted from Weiss:
GDXJ Rebalance Triggers Turbulence, Plus, Update on Market Correction!
by Mike Burnick and David Dutkewych on April 20, 2017 at 1:35 pm EST
I’ve seen several recent mailbag questions about turbulent trading conditions in VanEck Vectors Junior Gold Miners ETF (GDXJ) … and the fact that mining stocks in general aren’t performing as well as gold and silver. So let me address your concerns straight away …
First, the facts. GDXJ is one of the largest and most popular ETFs on the market that tracks mining shares. Well, out of the blue last week, the fund sponsor, VanEck, admitted a growing divergence between GDXJ’s stock holdings and the underlying index it’s supposed to be tracking.
Why? In a nutshell it’s because GDXJ has gotten too big for its own britches.
After massive money flows since December when mining stocks bottomed and began to rally, GDXJ now has a whopping $5.4 billion in assets.
But the reality is, the sector GDXJ must invest in is a relatively small, niche part of the stock market. Remember, many of the stocks in this space are thinly traded.
So VanEck simply was not able to put all this money to work in junior miners, and was forced to expand its purchases to include larger-cap mining stocks. In fact, it has upped its target market-cap range to as much as $2.9 billion … which is solidly in mid-to-large-cap territory!
In other words, the “J” in GDXJ no longer applies.
Naturally, as a result of this massive market-cap shift into larger stocks, VanEck may be forced to sell $2.6 billion worth of stock holdings in GDXJ, representing gigantic turnover of 60% or more of the entire ETF portfolio.
So this internal makeover of GDXJ is a big reason why the ETF hasn’t been tracking its index lately … much less the price of gold or silver. It’s also the reason why we’re seeing unusual volatility in mining stocks in general, but not to worry.
While we expect more short-term volatility in the sector, perhaps even a correction, we’re monitoring GDXJ closely and will let you know asap if we need to exit this position.
The good news is this artificially-induced turbulence is bound to create some outstanding buying opportunities in select mining stocks, and we have several on our watch list right now. We’ll be sure to let you know when to make your next move!
Meanwhile, stocks are finally starting a long overdue correction with the Dow down about 3% from its March peak, and we see more to come for two very good reasons.
Reason #1 – Lousy economic data: Recent data shows the U.S. economy fading fast. In fact, even the Atlanta Federal Reserve cut their own estimate for first quarter GDP in HALF … down to just 0.5% for the last three months ended March.
That’s a sharp slowdown from a GDP growth rate of 3% in the fourth quarter of 2016, and
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