Gold Miners Shares Pay Dividends

It is important to note that the VanEck Gold Miners UCITS ETF is an accumulating ETF, meaning dividends generated by the underlying companies are not distributed to shareholders but are instead reinvested within the fund. While this reinvestment can potentially enhance growth over time, it also introduces a risk for investors seeking income, as they will not receive direct dividend payouts. Additionally, the reinvestment of dividends may not guarantee proportional growth in volatile market conditions .

VanEck Gold Miners ETF Provides Enhanced Exposure to Gold Prices Through Operational Sensitivity, Without Financial Leverage

Historically, gold mining stocks have outperformed the price of gold during bull markets, offering a leveraged exposure to gold price movements. This happens because gold mining companies benefit from operational leverage. When the price of gold rises, their profits expand at a faster rate than the increase in gold itself, as mining costs tend to rise more slowly. For example, during the 2000-2011 gold bull market, gold prices rose by about 550%, while gold mining stocks surged over 690%³ lin price. Past performance does not guarantee future results, and current performance may differ, so investors should be cautious in assuming past or current trends will persist. Note that the reverse also holds true: when gold has fallen, gold mining stocks have fallen further. Gold miners, especially junior ones, display in fact a relatively high beta to gold, meaning they tend to amplify gold price movements. Investors should note that past performance is not a reliable indicator of future results, as the market can change. They often operate in early exploration and development stages, which amplifies both gains and losses as gold prices fluctuate. In contrast, larger, established miners have more stable operations and diversified revenue streams, making them less volatile in comparison⁴ to junior gold miners.

³  Barrick Gold Corporation - Case Study 2020.

⁴  Sprott Gold Report July 2023, Gold vs. Gold Stocks, An Unresolved Incongruity.

Potential to Access Value Creation Through VanEck Gold Miners UCITS ETF

Mining companies boost stock price returns by discovering new gold reserves, and by improving operations. However, if exploration fails or operational efficiency doesn't improve, they risk higher costs and depleted resources, which can lower stock prices. The balance involves weighing the potential gains from successful mining operations against risks such as exploration failure, operational issues, and external factors like fluctuating gold prices or regulatory changes. Operational improvements can be achieved, for example by keeping costs contained and driving up efficiency. The following graph sums up the all-in sustaining costs of gold (AISC) QoQ and the price of gold QoQ, both expressed in US$/oz. AISC represents the full cost of sustaining current mining operations. The difference between the costs and the price of gold has been adopted as a common metric to evaluate the profitability of gold miners at a determined time. The larger the distance between the two, the higher the miners’ value creation potential, accessible through the Gold miners ETFs offered by VanEck.