Van Eck Buying Huge
We’ve chosen to focus our efforts on the Junior Gold Miners ETF (GDXJ) because it’s a relatively large fund (~$2.8 billion) focused on relatively small companies (~
.15 to $2 billion). Significant allocation changes, especially if implemented swiftly, have the potential to overwhelm the normal trading in the market and drive share prices of constituent companies sharply higher or lower. This creates an environment ripe with speculative opportunities, and we believe there’s significant money to be made for those who understand the mechanics of the Van Eck funds. Look no further than the 3 month chart of East Asia Minerals (EAIAF.PK) to witness the level of influence GDXJ selling pressure can have on a relatively thinly traded company (detailed discussion here).
This quarter the Junior Gold Miners index is dropping First Majestic Silver (AG) and Silver Standard Resources (SSRI) and will be adding the following 9 companies:
Clearly the vast majority of allocation changes can be written off as inconsequential
although a few of the companies remaining in the index will see significant buying (and one with significant selling). There are 11 companies, however, that are being added to or removed from the index and the buying or selling related to these should have a much greater influence on the share prices. So let’s focus on these 11 companies:
https://seekingalpha.com/article/293249-reacting-to-a-rebalancing-of-junior-gold-miners-etf